The UK government has been increasing its lobbying activity in an attempt to seal a trade deal with the United States. This follows on the heels of President Donald Trump’s announcement of new tariffs. The tariffs are a 10% tariff on all UK imports and a 20% tariff on all European Union imports. This has raised fears over future job cuts and economic impact.
Chancellor Rachel Reeves has emphasized that the government’s strategy, which results in lower tariffs compared to those facing EU countries, “vindicates” their plans. She noted that the difference between a 10% tariff and 20% tariff could be thousands of jobs at stake! This growing disparity is a real danger for British workers.
In the months leading up to Trump’s surprise tariff announcement, UK officials were already on the move. They worked hard to negotiate a trade deal to minimize the damage from these levies. This deal would seek to do more than just eliminate tariffs. It will address digital economy and cover trade in goods, services and agriculture.
“We will keep negotiating, keep cool and keep calm. We want to negotiate a sustainable trade deal, and of course to get tariffs lowered. Tomorrow we will continue with that work.” – Downing Street source
Reeves has already been critical of the UK’s tax approach towards big tech. These changes may do enough to begin to mitigate US tariffs as move towards an ongoing, on-going negotiation. Specifically, the digital services tax entails a 2% tax on large tech firms. This pollution tax brings in over £800 million each year for the UK’s economy.
Economists are still worried that an even bigger UK-China trade spat would cut UK GDP growth by 1%. This cut would erase the £9.9 billion economic headroom that Reeves boasted about in last week’s Spring Statement. Many analysts believe this conflict will push up prices for American consumers. What they’re not warning about is a booming economy, either here at home or on the world stage.
“Today’s announcements are deeply troubling for businesses and will have significant ramifications around the world.” – Rain Newton-Smith, chief executive of the CBI
The UK’s motoring manufacturing sector has registered its bitter disappointment at the imposition of tariffs, pointing to the £50bn threat to their future operations. Business Secretary Jonathan Reynolds reiterated the government’s commitment to avoiding a full-scale trade war while emphasizing the importance of engaging with affected businesses.
The Confederation of British Industry (CBI) agree and add that “There must be a careful negotiation… They claim that in a trade war, nobody wins. In response, they are pushing for a “measured and proportionate approach.” At the same time, business leaders are preparing to make their case to state and federal lawmakers this Thursday.
“Business has been clear: there are no winners in a trade war.” – Rain Newton-Smith, chief executive of the CBI
This announcement on tariffs is a significant turning point in American policy. For years, the nation has adopted free trade ideals. This shift raises alarms about potential long-term consequences not only for US trade relations but for global economic stability.
Andrew Griffith, the Conservative shadow trade secretary, criticized Labour’s management of the situation in stark terms. He blamed the possible loss of jobs on their opposition to his government’s Brexit negotiations. He said that, with the help of Brexit, the UK has been able to escape the deeper tariffs that EU member states are subject to.
“Sadly, it is British businesses and workers who will pay the price for Labour’s failure.” – Andrew Griffith, Conservative shadow trade secretary
Griffith further welcomed the new lower tariffs as a “Brexit dividend” which will save thousands of British jobs and businesses. This sentiment underscores the intricate relationship between national economic interests and the forces at work in global trade.
As discussions with US negotiators go on, UK officials are still set on ensuring that these negotiations end in a way that’s advantageous for the UK. The government’s aim should be to allay fears from health, civil society and many other sectors of society while creating an environment that encourages sustained economic growth.
“We need to end this trade war as quickly as possible – and that means standing firm with our allies against Trump’s attempts to divide and rule.” – Lib Dems