Brexit has saved Britain from the worst of President Trump’s tariff war, analysis by Facts4EU and GB News has revealed.
The US leader has slapped 25 per cent tariffs on trading partners like Canada and Mexico, though some items have been exempted.
Canada, whose sovereignty has been repeatedly challenged by Trump’s desire to make it the 51st state, has responded with heavy tariffs of its own, including 25 per cent on electricity supplied to the US’s northern states. Mexico has not retaliated.
Trump has also raised the ten per cent tariff the US had on all Chinese goods (a measure he enacted in his first term) to 30 per cent, something he says is in response to the illegal drug fentanyl entering the US.
Trump has made tariffs central to his agenda
REUTERS
“We’re going to take in hundreds of billions of dollars in tariffs, and we’re going to become so rich, you’re not going to know where to spend all that money,” said Trump.
China responded by putting 15 per cent import taxes on US farm goods.
More importantly for Britain, Donald Trump has also targeted the EU- Britain’s former trading bloc- which he has called ‘way out of line’.
His 25 per cent tariff on all steel and aluminium products- which applies worldwide – provoked the EU into raising import taxes of about $28 billion on a range of goods including steel, aluminium, textiles, appliances and farm products. Those tariffs are scheduled to start in April.
Trump’s decision to slap steel and aluminium imports with 25 per cent tariffs is ‘reckless and ill-thought-out’, Norman Lamont has saidPAThis included a 50 per cent tariff on American whisky, a measure that is grabbing headlines this morning because it has drawn a fierce counter retaliation from Donald Trump of an eye-watering 200 per cent tariff on any EU alcohol.
The US president was enraged by the ‘nasty’ whisky tariff and lashed out at the EU calling it ‘hostile and abusive’ and ‘formed for the sole purpose of taking advantage of the United States’.
One sore point for Trump is the fact EU vehicles imported into the US are subject to a 2.5 per cent tariff while US vehicles imported into the EU attract a 10 per cent tariff.
One country that is notably absent from that list of nations Trump is waging economic war is the United Kingdom. Aside from the 25 per cent steel and aluminium tariff which is worldwide, Britain is yet to be targeted despite a large amount of trade being done between the two nations.
This is all to do with Britain and the US’s ‘balance of trade’, the difference between the monetary value of a nation’s exports and imports of goods over a certain time period.
Indeed, between October 2023 and September 2024, the US has a trade surplus with the UK of +$15billion, meaning it exported $15billion more of goods and services to Britain than we imported.
This was in stark contrast to the US’s trade deficit with the EU of an eye-watering -$150billion, meaning the US imported $150billion more of goods and services than it exported to the bloc.
US trade deficit with EU / trade surplus with UK
Facts4EU
However, perhaps more important than overall trade balance sheets when talking about tariffs is the balance of trade on goods only.
This is because you can only put a tariff on physical items. ‘Services’ such as financial consultation flow between the US and UK more freely.
Again, Brexit Britain is in a much better position than the EU. In goods only, the US has a surplus of +$9.7billion per year with Britain, meaning it exports $9.7billion more goods to our shores than we import.
But with the EU, the US has a goods-only deficit of -$201.7billion per year, meaning the EU exports $201billion more goods to the US than it imports.
US goods trade deficit with EU / goods trade surplus with UK
Facts4EU
The staggering differences in trade balances reveal why Britain may be saved from Trump’s tariff war.
Simply put, America’s trade surplus is a “win” in trade terms – more American goods are sold abroad, supporting US jobs and industries.
Imposing tariffs on UK goods would risk retaliation against US exports, potentially shrinking this surplus. Since the UK is a net buyer of US goods, the US has less incentive to disrupt this flow with tariffs.
The exact opposite is true of EU/US trade. The reason why Trump is slapping tariffs on EU goods is to try and reduce the deficit by making EU imports more expensive, encouraging US consumers to buy domestic alternatives or pressuring the EU to import more US goods.
The deficit gives the US a stronger motive to use tariffs as a bargaining chip or protective measure.
Of course, had the UK still been a part of the EU we would still have no control of our trade, meaning we would also be caught up in Trump’s tariff campaign.
The UK’s smaller market size and reliance on US exports also make it a less threatening partner compared to the EU bloc, reducing the political appetite for tariffs.
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Sir Keir Starmer is ‘keeping all options on the table’ to respond to Trump’s steel tariff
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However, Britain was unable to dodge one tariff from Trump, the worldwide 25 per cent duty on steel and aluminium.
The move was described by Business Secretary Jonathan Reynolds as ‘disappointing’, while Prime Minister Starmer said ‘all options are on the table’ in terms of responding.
The UK exports around 200,000 tonnes of steel per year to the US, worth over £400m. This is well behind China (6 million tonnes), Brazil (4.1million tonnes) and Mexico (3.2 million tonnes), and it only makes up 0.1 per cent of the UK’s economy.
However, 33,700 people are directly employed via steel in the UK with a further 42,000 in employed in supply chains.
Tariffs would seriously jeopardise hundreds of these jobs, many of which are being done by people whose parents and grandparents have been doing and feel very passionately about.
UK Steel Director General, Gareth Stace, said: “Today’s imposition of tariffs on UK steel from the US administration is hugely disappointing. President Trump must surely recognise that the UK is an ally, not a foe.
“Our steel sector is not a threat to the US, but a partner to key customers, sharing the same values and objectives in addressing global overcapacity and tackling unfair trade.
“These tariffs couldn’t come at a worse time for the UK steel industry, as we battle with high energy costs and subdued demand at home, against an oversupplied and increasingly protectionist global landscape.”