Kemi Badenoch criticises ‘fake conversation’ of Brexit damage as UK-Italy trade partnership signed
Fixating on the short-term damage caused by Brexit is a “fake conversation”, the new Business and Trade Secretary has said, adding that it will “take time” for the shape of Britain’s new economic arrangements to become clear.
In her first broadcast interview since business was added to her job brief, Kemi Badenoch told Sky News that she “can’t get in a time machine” and go back into the EU.
She said: “What I find frustrating is that we spend loads of time trying to re-litigate Brexit rather than focusing on solving new issues.”
She was talking after signing a new “trade partnership” with Italy – the first with a European nation post-Brexit.
The deal makes no change to the UK and Italy’s key trading regulations – from tariffs and quotas to customs rules – but she said it would help improve trade between the nations.
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When it was pointed out that the flow of goods and services between Italy and the UK has fallen since Brexit, Mrs Badenoch said: “It is the long-term trend that I need to work towards rather than what happened this year or last year.
“I think that that is actually what I would call a ‘fake conversation’. It’s like asking people who just got married: ‘where’s the baby, where’s the baby?’
“Some things will take time, and some things will happen quickly.
“We lost a lot of time during the pandemic. We lost a lot of time squabbling.
“Now we have a new government that is actually focusing on delivering for the British people.”
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Mrs Badenoch, who was trade secretary up until her department was merged with the business brief yesterday, said she understood why many Britons felt Brexit was going badly.
“This is one of the reasons why I’m here,” she said. “We spent so much time having an argument about whether we should have left or stayed in – many years, an entire parliament – but we haven’t actually spent enough time talking about what we can do with having an independent trade policy.
“So I’m not surprised a lot of people are feeling ‘Bregret’ because there are many other economic background factors, that have nothing to do with Brexit, which can make people feel bleak.”
Economic growth no longer ‘Cinderella’ of government
The minister, who has been widely tipped as a future Tory leader, said she liked to see her department as being focused on growth.
The prime minister, she said, “has now created an economic growth department by merging business with trade and I’m here to deliver on that.”
Mrs Badenoch had advocated for the splitting of the Treasury into a fiscal and a growth department during her leadership bid last summer.
She said that was effectively what her department now embodies after Mr Sunak’s reshuffle.
“The Treasury is so focused on all of the other matters that the economic growth bit… just seemed to always be the Cinderella in the department,” she said.
“I thought it was probably better if somebody else was just doing this separately.”
Need for steel?
Asked whether the UK always needed a steel industry, she said: “Nothing is ever a given.”
But she needed to “sit down and look at what exactly has been going on with steel from a business perspective and an industry perspective,” she added.
Asked how the UK would respond to America’s Inflation Reduction Act, a multibillion-dollar scheme to subsidise green industry, Mrs Badenoch said it should be wary of introducing subsidies of its own.
“We are a leader in many areas,” she said. “We can’t always just look at what America is doing and say: ‘well America is doing this, so let’s do the same thing’.
“That is not strategic thinking – what you’re describing is just copying and pasting. That’s not a strategy.”
Fears of a US-EU trade war have been reignited after Europe refused to back down in the face of fresh threats from Donald Trump.
The word tariff has dominated much of the US president’s second term, and he has repeatedly and freely threatened countries with them.
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This included the so-called “liberation day” last month, where he unleashed tariffs on many of his trade partners.
On Friday, after a period of relative calm which has included striking a deal with the UK, he threatened to impose a 50% tariff on the EU after claiming trade talks with Brussels were “going nowhere”.
The US president has repeatedly taken issue with the EU, going as far as to claim it was created to rip the US off.
However, in the face of the latest hostile rhetoric from Mr Trump’s social media account, the European Commission – which oversees trade for the 27-country bloc – has refused to back down.
EU trade chief Maros Sefcovic said: “EU-US trade is unmatched and must be guided by mutual respect, not threats.
“We stand ready to defend our interests.”
Donald Trump speaks to reporters in the Oval Office on Friday
Fellow EU leaders and ministers have also held the line after Mr Trump’s comments.
Polish deputy economy minister Michal Baranowski said the tariffs appeared to be a negotiating ploy, with Dutch deputy prime minister Dick Schoof said tariffs “can go up and down”.
French trade minister Laurent Saint-Martin said the latest threats did nothing to help trade talks.
He stressed “de-escalation” was one of the EU’s main aims but warned: “We are ready to respond.”
Mr Sefcovic spoke with US trade representative Jamieson Greer and commerce secretary Howard Lutnick after Mr Trump’s comments.
Mr Trump has previously backed down on a tit-for-tat trade war with China, which saw tariffs soar above 100%.
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Sticking points
Talks between the US and EU have stumbled.
In the past week, Washington sent a list of demands to Brussels – including adopting US food safety standards and removing national digital services taxes, people familiar with the talks told Reuters news agency.
In response, the EU reportedly offered a mutually beneficial deal that could include the bloc potentially buying more liquefied natural gas and soybeans from the US, as well as cooperation on issues such as steel overcapacity, which both sides blame on China.
Stocks tumble as Trump grumbles
Major stock indices tumbled after Mr Trump’s comments, which came as he also threatened to slap US tech giant Apple with a 25% tariff.
The president is adamant that he wants the company’s iPhones to be built in America.
The vast majority of its phones are made in China, and the company has also shifted some production to India.
Shares of Apple ended 3% lower and the dollar sank 1% versus the Japanese yen and the euro rose 0.8% against the dollar.
Donald Trump has threatened to impose a 50% tariff on the EU, starting from next month, after saying that trade talks with Brussels were “going nowhere”.
Mr Trump made the comments on his Truth Social platform.
It marks a fresh escalation in his trade row with the European Union, which he has previously accused of being created to rip off the US.
While the US has done deals with the UK and China to reduce their peak exposure to his trade war, the president’s EU threat, which would cover all EU imports to the US, would risk retaliatory measures from Brussels if carried through.
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Mr Trump said of talks between his administration and the EU: “Our discussions with them are going nowhere! “Therefore, I am recommending a straight 50% tariff on the European Union, starting on June 1, 2025. There is no tariff if the product is built or manufactured in the United States.”
The European Commission was yet to respond to the remarks. Officials signalled there would be no comment until after a call between top US-EU trade figures due later on Friday.
Financial markets, however, were quick to take a view. European stock markets were sharply down across the board.
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The FTSE 100 in London was more than 1.2% lower shortly after the Truth Social post appeared, while Germany’s DAX and the French CAC 40 were in the red to the tune of more than 2%.
US stock markets fell at the open on Wall Street. The tech-focused Nasdaq was down more than 1%.
The potential for damage to the global economy saw Brent crude oil sink by more than 1% to $63 a barrel.
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‘US is losing’ trade war
The dollar took a hit too, as the news only intensified existing market worries this week about the sustainability of US government debt levels.
The pound was trading at levels last seen in February 2022.
Mr Trump said earlier that Apple will be forced to pay 25% tariffs on its iPhones unless it moves all its manufacturing to the US.
Apple shares dropped more than 2% in premarket trading after the warning, also posted on Truth Social.
“I have long ago informed Tim Cook of Apple that I expect their iPhones that will be sold in the United States of America will be manufactured and built in the United States, not India, or any place else,” wrote the president.
“If that is not the case, a tariff of at least 25% must be paid by Apple to the US.”
Production of Apple’s flagship phone happens primarily in China and India, which has been an issue brought up repeatedly by Mr Trump.
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On Thursday, the Financial Times reported Apple was planning to expand its India supply chain through a key contractor.
Taiwanese company Foxconn is planning to build a new factory in the Indian state of Tamil Nadu, according to the paper, to help supply Apple.
Sky News has contacted Apple for comment.
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