Trump announces 10% baseline tariff

President Donald Trump has set out plans for new import taxes on all goods entering the US, with a baseline tariff on all imports of at least 10% and higher rates for countries that the White House described as the ‘worst offenders.’  While goods from the UK are set to face a new 10% tariff, import taxes on items from the EU will be set at 20%. Nations facing the highest charges to import goods to the US include China (34%), India (26%) and Japan (24%).

Responding to the announcement. Emma Rowland, Trade Policy Advisor at the Institute of Directors said “The implementation of these ‘Liberation Day’ tariffs will be a blow to British businesses, eliminating any hopes that the UK would be able to avoid the crosshairs of the global trade war. Today’s announcements only add to the challenges businesses currently face in the UK, presenting an additional barrier to growth.

“The US is the UK’s largest single trading partner, and an important export market for UK industries, particularly automotive, pharmaceutical, chemicals and whisky. Exporters to the US will be forced to review the viability of the US as a destination for their goods, and as a supply chain location. Alternatively, they may well have to reduce their profit margins to remain competitive.

“Recent IoD data shows confidence in the prospects for the UK economy already stands at depressed levels. Meanwhile, 59% of IoD members are concerned about the impact that rising geopolitical tensions are having on their organisation. An escalation in disruption caused by the tariff agenda will only erode confidence levels further. The OBR estimates that were the average tariff rate between the US and the rest of the world to rise to 20% points, this would reduce UK GDP by 1% at peak and wipe out the Chancellor’s fiscal headroom.

“The UK government has so far sought to pursue constructive engagement with the US administration and with other trading partners. We are supportive of this pragmatic and level-headed approach. The UK benefits from being an open trading nation, with strongly integrated international links. The IoD support the government’s efforts to sustain the position of UK exporters in an increasingly fragmented global economy.”

Tina McKenzie, Policy Chair of the Federation of Small Businesses, said “The news of 10 per cent tariffs on UK-US trade is a major blow to SMEs.  Currently, 59 per cent of small UK exporters sell into the US market.

“Tariffs will cause untold damage to small businesses trying to trade their way into profit while the domestic economy remains flat.  The fallout will stifle growth, hurt opportunities, and put a serious dent in the global economy. Now, we’ll need to look at the fine print to work out the precise implications for the UK’s small exporters.

“We support the push for an agreement between the UK and US governments that brings an end to tariff wars and puts SMEs at its centre by reducing non-tariff barriers.

“It’s already tough out there for small firms wanting to export.  However, the opportunities it brings are endless – allowing them to tap into new markets and diversify their revenue streams. Those who do export are more likely to grow faster during tough economic times, too.

“The UK Government should now be ready to provide emergency assistance to any SMEs at risk of collapse.  This will provide breathing space and support, protect people’s wages, and ensure that suppliers owed payments are paid – all helping to contain the fallout and allow firms a bridge as they adapt.”