Key facts
- New US tariffs, aimed at forced labor, have been announced.
- The EU's tariff rate has been reduced from 15% to 10%.
- The UK's headline tariff rate remains at 10%.
- Certain sectors, like clothing and chemicals, are now at a disadvantage for the UK compared to the EU.
- Tariffs on Scottish whisky are expected to be reduced to zero.
- The UK government stated there is no negative change to its tariff rates.
Donald Trump's administration has implemented new tariffs, ostensibly targeting countries that engage in forced labor, but experts suggest these measures place UK businesses at a disadvantage compared to their European Union counterparts. While the headline tariff rate for the UK remains at 10%, the new measures establish an all-inclusive 10% tariff for the EU, effectively improving the EU's trade position for sectors not covered by previous agreements.
This development contrasts with the UK's previous tariff deal, which experts argue has lost its comparative advantage in areas such as clothing and chemicals. For instance, a British knitted jumper, previously subject to a 12.5% tariff plus an additional 10% EPD tariff, now faces a total of 22.5% levies. In contrast, an EU jumper could be imported into the US at the new all-inclusive 10% rate.
William Bain, trade policy director for the British Chambers of Commerce, acknowledged the lack of change in the headline rate for the UK but highlighted the disparity created for certain sectors. He called for ongoing negotiations between the UK and the US to achieve lower tariffs.
The GMB trade union criticized the tariffs as "ill-judged" and potentially "catastrophic," with national secretary Charlotte Brumpton-Childs stating that the EU now holds a superior trading relationship with the US, undermining the "special relationship."
A UK government spokesperson asserted that there has been no negative change to the tariff rate for UK businesses, citing improvements such as zero tariffs on whisky and medical technology as recognition of the UK's efforts against forced labor. However, an EU spokesperson indicated disagreement with the premise of the forced labor investigation.
Further tariffs are anticipated from the Trump administration under section 301 of the 1974 Trade Act, with potential retaliation over the EU's recent fine against Google, which could lead to 100% tariffs on pharmaceutical products impacting Ireland, Germany, and Belgium.