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Britain must “prepare for the worst” of new import tariffs, Foreign Minister David Lammy said on Monday while the world awaited the beginning of Donald Trump’s trade war.
The United States president has threatened to impose fees of 20 percent or more on importing around the world, with immediate effect in measures that are expected to be announced on Wednesday – which he called ‘Liberation Day’.
Global Market Jitters continued on the potential impact of a trade war, as one study estimated that it could cost the world £ 1.1 trillion.
In Britain alone, 25,000 jobs are at risk according to the Institute of Public Policy Research (IPPR), which says that the new trade policy of the White House will completely destabilize the British car manufacturing industry.
Meanwhile, Goldman Sachs analysts expected Britain’s GDP to have a bigger hit than previously feared, even if a UK trade agreement was agreed, due to “greater negative distribution” of rates levied against the European Union. As a result, the bank now expects 0.8 percent of UK growth this year and 1.2 percent in 2026 – lower than 0.9 and 1.3 respectively.
Chancellor Rachel Reeves told a cabinet meeting that there would be a serious impact on rates.
And although Jonathan Reynolds, secretary of business, is trying to be optimistic about the prospect of a UK-American agreement, he could not give a timeline on when one would be completed. Ministers have also been forced to deny that the Trump administration makes demands on free speech in the UK as part of any potential trade agreement.
Mr. Trump has previously announced that a 25 percent tax on all cars imported to the US will be imposed. He also announced similar rates on steel and aluminum.
However, the announcement on Wednesday is expected to be much more wide.
As the world bumps for the impact, Ireland warned that it could lose up to 80,000 jobs under an ‘worst case’.
In the House of Commons, Mr. Lammy said that ‘intense discussions’ still occur on a possible economic agreement.
Calum Miller, spokesperson for the Liberal Democratic Foreign Affairs, asked if Britain should talk to the EU about a Customs Union to soften the rates.
Mr. Lammy replied: “It is currently very important that we continue with the intense conversations we have with the US administration to get an economic agreement, but of course we are preparing for the worst – all options stay on the table, as the prime minister indicated.”
Earlier, Tory leader Kemi Badenoch admitted that she did not try to use her relationship with senior White House figures, such as Vice President JD Vance, to avoid rates.
Researchers at the IPPR have warned that employees at Jaguar Land Rover and Mini are of the most exposed to a possible trade war.
About 16.9 percent of British car exports were to the US last year, representing a total of more than 101,000 units worth £ 7.6 billion.
IPPR -Research Fellow Pranesh Narayanan said: “Trump’s rates have a great potential to completely destabilize the British car manufacturing industry, affecting tens of thousands of jobs and compromising the government’s growth plans.”
Meanwhile, a new study from the Aston Business School in Birmingham estimates that a global trade war could cost $ 1.4 trillion (£ 1.1 trillion).
The research maps six increasing scenarios, starting with US rates on Canada, Mexico and China, to complete global retaliation, with associated broader losses.
Sir Keir Starmer told Sky News earlier: ‘The probability is that there will be rates. No one welcomes it.
‘Of course, we work with the most affected sectors. No one wants to see a trade war, but I have to act in the national interests. ‘
He said he hoped that the agreement with the US would soften the rates.
Asked whether he was by Mr. Trump ‘played’ is amid his efforts to build a good relationship, the prime minister said: ‘The US is our nearest ally. Our defense, our safety, our intelligence is in a way that is not two other countries.
“Of course, it is in our national interest to have a close working relationship with the US, which we have had for decades, and I want to ensure that we have decades after that.”
He said that talks about an economic agreement would normally last ‘months or years’, but ‘in a few weeks we progressed well in those discussions’.
The prime minister is reportedly prepared to offer our great technical firms a great tax cut to us to avoid Trump’s rates, as reported by The guardian.
It seems that the British government will lower the head rate of its Digital Services Tax and broaden its scope to include smaller businesses from other countries – a step that would be a significant concession for US technology firms.
The tax currently places a 2 percent levy on technical firms, including US giants such as Amazon, Meta, Alphabet, Ebay and Apple and currently brings about £ 800m a year.
If reduced, but opened to other countries, it could satisfy Trump who complained about the impact DSt’s has on US firms and brings £ 1.2bn to the government’s spending by the end of the decade.
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