UK Response to US Tariff Announcement
Downing Street has indicated that no reciprocal action is "off the table" should the US fail to honour its tariff agreement with the UK, while emphasizing that "no one wants a trade war." This statement follows US President Donald Trump's declaration of a 15% tariff on all countries effective Tuesday.
The prime minister's official spokesman noted that the "majority" of the UK-US deal, including tariffs on cars, steel, and pharmaceuticals, is not expected to change. However, he described the situation as "evolving" and confirmed ongoing discussions between the UK and US.
Meanwhile, US Trade Representative Jamieson Greer stated on Sunday that trade deals negotiated with allies would remain in effect.
Legal Background and Tariff Changes
On Friday, the US Supreme Court invalidated most of the global tariffs announced by Trump last year, ruling that the president had exceeded his authority. This decision impacted all tariffs introduced under the International Emergency Economic Powers Act (IEEPA), including those announced on "Liberation Day" last year.
Following the ruling, Trump announced a new 10% global tariff to replace the invalidated ones, later revising the rate to 15% on Saturday.
This 15% tariff is to be implemented temporarily under Section 122 of the 1974 Trade Act. Certain products, such as critical minerals, metals, and pharmaceuticals, will be exempt from this levy.
Impact Analysis from Global Trade Alert
Analysis by the think tank Global Trade Alert (GTA) indicates that the UK will be among the countries most adversely affected if the 15% global tariff is enacted, due to its previously negotiated 10% tariff deal with the US.
Conversely, GTA noted that countries like China and Brazil, which currently face higher tariff rates, would be comparatively better off.
The 15% global tariff would be applied in addition to any existing tariffs.
It is important to note that this tariff does not affect the tariffs agreed upon by the UK and US for specific sectors such as steel, aluminium, pharmaceuticals, automobiles, and aerospace, which constitute the majority of UK-US trade.
This distinction arises because the Section 122 legislation, which Trump intends to use to impose the 15% tariff, differs from the mechanisms used to introduce tariffs on specific sectors.
Industry Perspectives
Andy Haldane, president of the British Chamber of Commerce, told the BBC that the UK would "sit towards the bottom of league table" among trade partners if Trump's 15% tariff is implemented.
"The perversity of what happened of the weekend was that those who got good deals, the allies, have been most disadvantaged," he added.
US Trade Representative Comments
US Trade Representative Jamieson Greer told CBS that he had engaged with the EU and other countries over the weekend.
"The deals were not premised on whether or not the emergency tariff litigation would rise or fall," he said.
"These deals are going to be good deals. We expect to stand by them. We expect our partners to stand by them."
UK Government's Position
The UK prime minister's official spokesman stated:
"Our approach to the US has always been pragmatic.
We continue to have productive conversations with them... and those discussions are happening at all levels, but nothing is off the table at this stage.
Industry doesn't want to see a trade war where both sides keep escalating the situation, and that's why our focus is on constructive engagement with our US counterparts to retain the UK's competitive advantage."
Industry Concerns
Richard Rumbelow, director of international business at manufacturing industry body Make UK, expressed concern about the potential disruption to UK exporters.
"Many UK exporters will be concerned at the further prospect of trade disruption to goods entering the US market," he said.
"Clarity is now urgently required on how UK exports will be treated on arrival into the United States."
