How will the UK respond to Donald Trump’s ‘Liberation Day’? After the US President announced a batch of new tariffs yesterday, including a 10 per cent blanket levy on imports from the UK, ministers are discovering the pros and cons of the new normal. Supporters of Keir Starmer have taken comfort that the White House has imposed the lowest rate on the UK.
China faces total effective tariffs of 54 per cent, and the EU will be on levies of 20 per cent. While some around the Prime Minister have suggested that the UK is receiving preferential treatment because of clever diplomacy, others point to the trade deficit and fact that it is outside of the EU.
Yet even a low tariff is a problem. Starmer told business leaders in Downing Street this morning that the tariffs will ‘clearly’ have an economic impact on the UK. It’s not just the imports tariff worrying ministers – an even bigger concern is the overall hit to the global economy from the trade war. Both the EU and China have threatened retaliatory action. Could the UK be next? So far Starmer and his ministers have been keen to play down the idea of retaliatory tariffs, instead looking to secure concessions through a limited trade deal. However, speaking in the Commons this lunchtime, the Business Secretary Jonathan Reynolds said the government is launching a consultation on what retaliatory tariff measures against the US would mean for businesses.
Reynolds added that the preferred option of the UK government is a deal – but said they reserve the right to take action if an agreement is not secured. Given some in the UK have grown frustrated with how long securing a deal is taking, despite offering a number of concessions, this is an attempt to show that Starmer’s government could take a tougher approach if required.
Even if ministers decided they needed to take drastic action, any retaliatory tariffs would not come for a while yet. Reynolds said the government will seek the views of stakeholders this month on products that could be included in a tariff response, with a 1 May deadline.
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