Even before the tariff tiff, Europeans were at risk of a geopolitical squeeze between the US and China. In trade, this is now happening. Despite Trump’s U-turn last week, we are still in a worst-case economic scenario. American tariffs on Chinese imports are now 145% — a level at which nations stop trading, even if Trump has since made an exemption for electronic goods and components. In all this, Europe emerges as the loser: it is far more exposed to trade shocks than America because it relies more on foreign trade.

How, then, can Europeans protect their interests? My advice is first and foremost not to get distracted by military matters. What is the greater threat to Europe — the US abandoning multilateral free trade, or a Russian invasion of Northern Europe in the mid-2030s? In the short term, it’s the former. While Russia has strong defense capabilities, it will not have the resources to fight another big war for at least 10 years. Europe will need to get its military in shape before then, but this is a medium-to-long-term job. By contrast, the split in the transatlantic alliance and the assault on the international trading system is taking place right now. It’s the threat we should be most focused on today.

An adequate response to this threat would require deeper cooperation between the EU and the UK. But this means not getting sidetracked by another Brexit debate. When the European Commission announced it would open talks with the UK on defense cooperation, France immediately suggested that this would be a good moment to re-open the EU-UK talks about fish. Never underestimate the level of pettiness in European politics.

The most immediate joint action I would recommend is a coordinated macroeconomic policy response in the form of a fiscal stimulus for consumption and investment. Perhaps Canada could be roped in, or even China. Now is a great moment to do this because it would protect Europe and the UK from a sharp recession — plus, it wouldn’t cost very much. The infamous bond vigilantes are currently busy fighting Trump — and they can’t fight on two fronts at once. Last week, the US bond market came close to seizing up as people lost confidence in the future role of the dollar as a global reserve currency. If you move your money out of the US, you have to move it somewhere. This is why the euro is rising against the dollar.

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Economic stimulus would not only mitigate the economic downturn in Europe, it would also help to rebalance the global economy. The problem of global imbalances is not really about trade, as Trump erroneously insists. It’s about the US saving too little, and the rest of the world, especially China and the EU, saving too much. The difference between what a country saves and what it invests is approximately the same as the difference between what it exports and what it imports. It is the financial side of this equation that drives the product side, and not the other way round.

If the EU, the UK, Canada, and perhaps even China came together to agree on a joint stimulus, it would be a win-win for everyone. If the Trump administration is genuinely keen to solve the problem of global imbalances, as members of Trump’s team suggest, then they should welcome such an antidote.

My next suggestion will probably go down less well with the Americans. The EU and UK should begin to replace a traditional diplomacy centered around relationships with a diplomacy that prioritizes the national, or European, interest. After all, Trump’s tariffs do not benefit Europe: not a single European country can align with Trump on this issue and emerge victorious.

If the US and China decide to fight it out, Europe would be wise not to take sides. Keir Starmer, the UK prime minister, has so far refrained from doing so: “We shouldn’t jump in with both feet to retaliate”, he told the Liaison Committee of the House of Commons. This is exactly the right thing to do. And Europe should follow his lead by staying neutral. After all, Trump is not our friend. He could not care less who wins the Russia-Ukraine war, in which he casts himself as a neutral arbiter. He does not play on our team.

Europe should see the US and China as strategic competitors, not as enemies. For the EU, now would be a prime moment to revisit the EU-China investment agreement. Angela Merkel and Emmanuel Macron negotiated the deal with President Xi in 2020, but the European Parliament shelved it a year later, after China banned a few MEPs from visiting. The relationship became frosty, though it has been thawing lately. When Rachel Reeves, the UK chancellor, visited China recently, she came out in favor of greater cooperation. It would be easier to cooperate, however, if the EU, the UK, and Canada acted together. If only we weren’t so afraid of provoking Trump’s fury.

Of course, any cooperation with China must respect national security interests. It would be wrong for Europe or the UK to rely on China for critical infrastructure — we should not revert to the bad old days when we did not care about security. But cooperation is not the same as dependency. The goal is to make sure that the global trading system can continue to function, with or without America.

The alternative to this would be dire. The US and China could someday stop trading with one another altogether. In such a scenario, China would start selling its unsold goods to Europe at knock-down prices, driving European competitors out of business. The EU and the UK might then respond by imposing tariffs on China. As we saw last week, China would retaliate immediately. The world trading system would suffer a cardiac arrest.

Yet while greater cooperation makes perfect sense for the EU, the UK might be wary of it. The island nation is still holding out for a trade deal with Trump, and hoping that the President will drop the 10% tariff. If this were to happen, the UK would find itself in a very small group of privileged American trading partners. China will clearly not be part of that group. And I doubt the EU will be either, especially if Trump imposes a 20% tariff on the bloc, and it retaliates. Perhaps South Korea, Vietnam, or Japan will make the cut.

But this would mean the world splitting into competing tariff zones, with the EU and the UK on opposite sides of a new global tariff border. And if Trump and Starmer were to agree to a trade deal, Trump would almost certainly insist that the UK mirror US tariff policy. He could not otherwise impose different tariffs on different countries.

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Would this make sense for the UK? In 2023, the UK imported £115 billion of goods and services from the US and exported £187 billion. That same year, it imported £466 billion from the EU and exported £356 billion. So the UK imports roughly four times as much from the EU as it does from the US. And it exports twice as much to the EU than it does to the US. The trade numbers with China are smaller, but it all adds up. With this in mind, it would not make sense for the UK to break with the EU and Canada to join Team America.

Naturally, trade numbers are not cast in stone. They would change if the UK were to align with the US. In a world where many services are delivered digitally, and where container shipping is cheap, geography matters less than it used to. And there is at least one scenario in which it would benefit the UK to align with America: if the EU were to retaliate against American tariffs, the UK would be foolish to join in. Post-Brexit Britain cannot afford a tariff war.

The UK and the EU have three options now: align with the US, become more independent, or do nothing and let others decide their fate. My own preference would be the second course of independence. My hunch is that the UK will try to stick with its traditional alliance with the US for as long as possible. I see the EU splintering: Italy, under Meloni, will align with the US. So will Hungary. And so may some eastern European countries that prioritize security over trade. Meanwhile, France will seek greater independence, and Spain will favor a closer alliance with China.

What about Germany? Friedrich Merz, the presumptive next German chancellor, would be more inclined than any of his predecessors to seek a closer alliance with the US. He did not agree with the EU’s negotiating position on Brexit. What the Germans and the British have in common is that they are instinctive free traders. If there is any hope for Europe to lead a world of free-trading nations, Germany and Britain would need to be at the forefront.

This is, after all, a time for action. Either we rise to the occasion now, or else we allow the era of global free trade to slip from our fingers — and with it, all our prosperity.

Instead of gears and springs, these watches used a battery-powered circuit to count the electrical pulses generated by a vibrating sliver of crystal. The result was astonishing accuracy, an order of magnitude greater than the finest mechanical timepieces. And because they didn’t require the same painstaking craftsmanship, quartz watches could be mass produced cheaply.

Almost overnight, the Swiss product became obsolete. By 1980, Japan had overtaken Switzerland as the world’s largest watch producer. More than half of Swiss watch companies collapsed. Two thirds of all watchmaking jobs disappeared. For many, the industry was due its last rites.

But the truth, as any trip on a Geneva airport travelator will impress upon you, is that the Swiss watch industry today is thriving. And at the heart of this success sits one company in particular: Rolex — the undisputed king of the global luxury watch market. Last year it likely sold nearly double that of its nearest competitor, Cartier, booking revenues larger than its next four rivals combined.

You’d be forgiven for assuming that Rolex’s dominance came as a result of the decisions it made during the industry’s Eighties inflection point: recognizing the shift before anyone else, making the boldest moves, and, in doing so, leading the charge.

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You’d be wrong. They did the opposite. They stuck with their core line of mechanical models. Repositioned their pricing only gradually. And bar launching a single new line, they left quartz alone. Rolex stopped, stayed still, and let the world come back around. It worked. By 1989, sales were back to record levels, and the company was well on its way to the unassailable position they hold today.

This is not usually how we tell success stories. We prefer tales of bold moves and dramatic reinvention: the visionary founder, the company that turned on a dime. But sometimes fortune doesn’t favor the bold. Sometimes it favors the boring.

In the luxury market, above all others, this is the strategy that most often leads to success. Hermés’s best-selling product, the Birkin bag, remains unchanged since its debut in 1984. Loro Piana’s clothing line avoids logos at all costs. And even the most radical of the luxury conglomerates — LVMH and Kering — retain corporate structures that put families, not investors, in the driving seat. In this world, slow and steady is not merely a virtue. It’s the whole business model.

The feeling of existential crisis that gripped the artisans of Switzerland in the Eighties will be familiar to anyone who has turned on TV news recently. The shock of the tariffs, and their subsequent 90-day pause, however, provide us with an important lesson ripped straight from the world of luxury: that sometimes the best strategy is to wait.

That’s a hard thing to say out loud. For the past few years, the mood music in our country has been to speed things up, not slow them down. When it comes to solving Britain’s problems we rightly aspire to West Coast velocity, not the glacial pace of a luxury goods company. You don’t need to invoke the Lower Thames Crossing paperwork, or the geological timelines of the UK’s Small Modular Reactor program, to know that wait-and-see government usually ends in disappointment. Slowness, domestically, at least, is a luxury we can — and should — do without.

But when it comes to how we position ourselves as a country in the midst of a global trade war, ballast might just matter more than bravado. Trade between the world’s two largest economies remains essentially frozen, and the negotiations ahead promise to be just as chaotic as the week that triggered them. The unexpected pause is just the President’s latest in a long line of mercurial moments.

When another, in time, arrives, we’ll soon hear another wave of frantic calls for Britain, unprepared and overexposed, to take quick, reactive measures. But in moments when boldness feels like the most obvious response, Britain’s smartest move will likely continue to mirror Rolex and hold still. Call it what it is: luxury geopolitics.

If we want to adopt that posture — less startup nation, more storied brand — what would that look like in practice? Well, great luxury companies generally rely on three things.

The first is a heritage and a story: a long, slow accumulation of trust. Rolex’s brand strength in the quartz crisis wasn’t just aesthetic, it was psychological. People had come to believe, almost irrationally, in the quiet, steady competence of its product. Think of the Submariner (most famously worn by Sean Connery in Goldfinger), a diving watch sold on the promise that it would never fail you at the exact moment you really, really need to know the time.

In a volatile world, where the US has turned from a beacon of stability to an agent of unpredictability, restraint becomes rarer and more valuable. That’s why calls to retaliate quickly with tariffs of our own, coordinate a fast response with the EU, or convene yet another emergency summit, all fell wide of the mark. The more others shift the rules, the more valuable it becomes to be the one player who doesn’t.

And if we really do want to go full luxury geopolitics, then Britain is unusually well suited to the part. A coronation, a visit to Balmoral, a raised eyebrow from the King — these aren’t just ceremonial flourishes. They’re signals. Like Rolex, Britain still carries a brand. And in the one capital that matters most right now, that brand still means something. That’s leverage, and we’d be foolish to squander it.

The second is product. A luxury brand is only as strong as the thing it sells. Packaging matters, yes: but only if what’s inside holds up. Rolex works because the watches do. This, I think, is where Britain is most vulnerable. The story still plays, but the substance is lagging behind.

Which is why the luxury should stop at the front door. Brand abroad, yes. But at home, it’s time to get serious. That means making the product better: faster planning, cheaper energy, lighter regulation. You can’t sell craftsmanship if your tools are blunt.

The good news, if there is any, is that we’re arguably less exposed than others. Our exports to the US tend to be highly differentiated and hard to substitute. Less soybeans and steel bolts, more jet engines, Range Rovers, and precision instruments.

A 10% tariff is still painful, of course — but in our case, it’s easier to manage. The relative concentration of our goods sector, where a few large companies often dominate, means the government has clearer levers to pull: from production shifts to policy tweaks or negotiating carve-outs.

There’s plenty of low-hanging fruit. Take our most obviously vulnerable sector — car manufacturing — which even now remains hampered not only by foreign competition, but by domestic regulation. This is something the Prime Minister seemed to signal earlier this week at Jaguar Land Rover. “We’ve got your back,” he declared, while announcing only the mildest of changes to the zero emission vehicle mandate in response.

It’s easy to wince at such a gap between rhetoric and reality. But it also means there’s still plenty of headroom left to respond, if required. The current government is not exactly averse to using a crisis to railroad through reforms they’d never be able to do otherwise. This is an impulse to reward, not to punish.

The third is independence: something particularly integral to Rolex’s survival during the quartz crisis. One of the core reasons why it was able to maintain its defensive crouch, whilst its great rival of the time, Omega, floundered, was that Rolex wasn’t entangled in either of the two Swiss conglomerates that dominated the industry at the time. Instead it is, and remains, owned by a family governed charitable foundation.

The result was that it wasn’t tied to external timelines, or forced into reactive decisions to continue making the numbers go up and to the right. Omega, in a panic, ended up finding its offering expanding to around 1,000 different models. Rolex waited, watched its rivals stumble, and acted only when it was ready.

Perhaps it’s not so bad, then, if Britain is more Rolex-shaped than policymakers would like. We’re slow. We’re cautious. We’re surrounded by larger blocs. But we’re also, crucially, not beholden to any of them. What until now has looked like drift might end up feeling more like optionality. We’re not anyone’s favorite. But we’re no one’s least favorite either (bar, perhaps, Russia). In a trade war, that’s not a bad place to be.

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Indeed, luxury geopolitics alone won’t save us. But strategic patience might. Already things have swung wildly each day. Relief one moment, paroxysms the next. Our tariff margin against the rest of the world widens and narrows with the stroke of a single Truth Social post. The more things change, the more valuable it is to be the most stable player in the game.

This isn’t to say our current moment is one to press home a competitive advantage. Like the Swiss watchmakers of the Eighties, our challenge is not to ride out the storm unscathed — or even strengthened. It’s simply to emerge with something intact.

The crisis Rolex managed to weather wasn’t just about watches. It was about continuity, about what endures and why. It’s easy to look at the tariff drama and imagine the affair neatly concluded: sides chosen, outcomes settled.

More likely, we’ll come to see this as just the beginning, not of a trade spat, but of something far more profound. A moment existential, not just for industries, but for an entire world order. And in that world, Britain’s institutions have weathered more and lasted longer. We like to think that action always wins. But sometimes, doing nothing is the most strategic move of all.

In Ian Fleming’s On Her Majesty’s Secret Service, James Bond finds himself trapped in an Alpine hideout. To escape, he must get past a hulking bodyguard. Fortunately, Bond has a secret weapon: a “heavy Rolex Oyster Perpetual” strapped to his wrist. He slides the watch onto his fist, turning it into, in Fleming’s words, “the most effective knuckle-duster”. Bond bides his time, lands a swift Rolex to the jaw, and makes his escape.

Reinvention is overrated. In geopolitics, as in luxury, there’s power in restraint. Sometimes all you need is patience, presence — and a heavy Rolex Oyster Perpetual to hand when it counts.