Full-scale trade war has broken out between the US and Canada, with Mark Carney vowing to match America’s tariffs ‘dollar for dollar’ and President Trump responding today with additional duties on cars made by America’s northern neighbour. This isn’t likely to end well for either side, and given the importance of cross-border trade in several battleground states, it certainly doesn’t bode well for the Republicans in the upcoming midterm elections – see more below.
The geopolitical threats are intensifying here as well, with Russia protesting as the UK gave Ukraine blueprints for long-range missiles, and the alarming news that Iranian hackers shut down a small UK power plant for four days last month. Our energy policies are damaging enough without enemy actors getting in on the act.
On the brighter side, the ongoing disarray of Britain’s national statistics may have hidden a pickup in economic productivity. The Resolution Foundation’s analysis finds that productivity since 2024 has grown by 1.1%, rather than 0.7%. Better yet, it appears to reflect real, broad-based improvements, rather than a loss of low-paid jobs or the impact of AI. Let’s hope John Healey’s autumn Budget doesn’t spoil it all.
Below you’ll find all the latest pieces from CapX, plus what we’re reading from around the web.
Marc Sidwell
Editor, CapX
Today’s Takes
Fresh thinking from CapX
Two tests for No 10 North
John Alty
‘Does it make sense to require public authorities to buy British if that means lower quality products at worse cost than could otherwise have been achieved, and a reduction in the competitive forces which lead to innovation?’
Economic policymaking is moving away from the Treasury to No 10 North. The project could pay dividends if it can pass two key economic tests. One tripwire Andy Burnham will have difficulty avoiding is sacrificing long-term economic growth for the buzz of positive press attention in the short term. Read More
The Great British meal deal should make you proud
Juno Chowla-Song
‘John Healey has found the wrong scapegoat for the cost-of-living crisis. Squeezing supermarkets harder won’t make lunch cheaper.’
Last month the Chancellor warned that supermarkets were taking shoppers for a ride. But he couldn’t be further from the truth. Just look at meal deals. They are unrivalled on price, globally. We should thank the supermarkets, who fight to get the best possible prices from their suppliers, incentivising them to become more productive. At the end of the day, it adds up to a better deal for all of us. Read More
Stat of the Day
Best of the Web
Trump’s self-defeating trade war
Jacob Heilbrunn, The Spectator
‘The consequences of a prolonged trade war would be bad for Canada but even worse for America.’
Are Trump’s tariff policies about to crash the Republican party’s political fortunes? With the US midterm elections looming, the Canadian Prime Minister Mark Carney has walked away from trade talks, and Trump has responded with punitive new duties on Canadian goods. This is a godsend for Democrats campaigning in battleground states like Maine. Read More
🎧Compliance is costing us dearly
Damian Pudner
The capital needs its trams back
Nicholas Boys Smith, City AM
‘London destroyed the world’s greatest tram network in the belief that buses and cars would free its streets. Instead, it exchanged permanent capacity for permanent congestion.’
In the 1920s, London had the world’s largest tram network: a system created with private capital and largely paid for by passenger fares. Then state control ruined it all. Today, a global tram renaissance is underway, but London is still missing out. The capital needs to be given the freedom to make trams again. Read More
The Capitalist: Nimbyism is a national security threat
And if you want more...
– How Auckland solved its housing crisis (Financial Times 🔒)
– Dear Chancellor: stop the tax creep (Helm)
– Reform are getting Thatcherism wrong (UnHerd)
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