UK will ‘wait and see’ on Trump’s ‘reciprocal tariffs’ announcement
A senior Government minister said it was important not to ‘overreact’ and there were still many ‘unanswered questions’ about the announcement.
The Government will “wait and see” whether tariffs announced by Donald Trump on Thursday “actually come to pass”, a senior minister has said.
The US president announced what he called “reciprocal tariffs” on all other countries on Thursday evening, claiming it was “fair to all”.
But immediately following his announcement, it was unclear how this would apply to the UK, especially as Mr Trump suggested his policy regarded VAT as a tariff.
Pat McFadden, Chancellor of the Duchy of Lancaster and one of Sir Keir Starmer’s most senior ministers, told Sky News on Thursday evening it was important not to “overreact” to the announcement from the Trump White House.
Asked what the Government’s response to Mr Trump’s announcement was, Mr McFadden said: “Wait and see what it means, it’s the best reaction to everything over the last month.
“Sometimes tariffs are announced, a couple of days later, they are unannounced.”
He added: “The most sensible thing to do with all of these announcements is to digest them, see if they actually come to pass, and then decide what you do.”
Saying there were still “a lot of unanswered questions” about the extent of the tariffs, he went on: “We took the decision…that we wouldn’t breathlessly chase every headline that was coming out over the last month.
“I think that’s the right decision.”
The policy published by the White House on Thursday is a wide-ranging one, threatening retaliation not just for tariffs but for other non-tariff barriers and “unfair or harmful acts, policies or practices”.
These include subsidies, “burdensome regulatory requirements” on US businesses and restrictions on animal and plant products, possibly including UK food standards that prevent the import of some US goods such as chlorine-washed chicken.
The policy also explicitly mentions “value-added tax” as an “unfair, discriminatory or extraterritorial tax”, despite VAT being levied irrespective of whether a product has been imported or not.
Mr Trump has announced a series of tariffs throughout the first few weeks of his presidency, including earlier this week imposing a 25% levy on steel imports.
But while his approach to international trade has frayed relations with some of the US’s closest allies, particularly Canada, his announcements have not always proved permanent.
Having announced tariffs on Canada and Mexico, he later suspended these for 30 days following negotiations.
Canada and Mexico have readied retaliatory tariffs should the duties come into effect, as has the EU, which Mr Trump has repeatedly threatened, while China has already taken retaliatory steps to a 10% tariff on its exports to the US.
But on Thursday evening, Mr McFadden would not be drawn on whether the UK planned to retaliate, saying it was “premature” to talk about the possibility.
He said: “How mature would it be for me to walk into a studio five minutes after some announcements and say ‘yeah, we’re going to retaliate’?
“That’s not the way you make policy.
“We will always stand up for the national interest, it’s a government’s duty to do that, but the best thing in the national interest is to maintain a good trading relationship with everybody that we need to maintain that with, right across the world.”
Thursday’s tariffs will not come into effect immediately, with Mr Trump ordering his advisers to carry out investigations into other countries’ trade practices before suggesting what measures to impose.
Following the announcement, the British Chambers of Commerce (BCC) warned that Mr Trump’s plans would “upend established trade norms” and cause “more cost and uncertainty for investors, businesses and consumers across the world”.
But the BCC’s head of trade policy, William Bain, urged the Government not to “get sucked into a trade war of tit-for-tat tariffs, which could easily spiral out of control”.
He added: “But it must make the most of the time available before the introduction of these tariffs to negotiate with the US on alternative arrangements.
“If they do not, then sectors such as automotives, pharmaceuticals and food and drink could be significantly hit as higher tariffs inevitably feed through into globally higher prices for consumers.”
UK-US trade is worth around £300 billion per year, with Britain importing slightly more from the US than it exports to the country, a fact ministers hope will help secure exemptions from Mr Trump’s tariff regime.
Most of Britain’s exports to the US are in the services sector, and it is unclear whether Friday’s tariffs include services, although the UK does export more than £8 billion worth of cars and more than £6 billion worth of pharmaceutical products to America.
