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Britain’s balanced commerce with the US ought to scale back the danger that Donald Trump slaps contemporary tariffs on its merchandise, enterprise secretary Jonathan Reynolds has claimed.
The incoming US president has threatened to impose greater tariffs on all imports, leaving its buying and selling companions internationally to think about how they’d reply if hit.
Even when Trump did hit the UK with contemporary tariffs, the federal government would suppose very fastidiously about retaliating, Reynolds added: “In this country there’s no political constituency for protectionism.”
In an interview for the FT’s World Boardroom to be broadcast on Friday, the enterprise secretary additionally performed down the prospects of a conventional free commerce settlement between the UK and US, admitting that Britain’s meals requirements guidelines would stay an impediment to such an accord.
Reynolds admitted that Britain could be affected by a commerce warfare amongst western international locations however mentioned he hoped the UK wouldn’t be instantly focused with extra tariffs by Trump.
The “political philosophy” behind Trump’s name for a worldwide tariff was the president-elect’s concern about US commerce deficits in manufactured items, which “don’t apply to the relationship between the UK and US”, he mentioned.
The US had a commerce surplus with the UK, together with an $8.2bn items commerce surplus within the January-September interval, based on official US figures.
Partly due to distinction in accounting for exports from the Channel Islands, the UK additionally studies a commerce surplus with the US. The overwhelming majority of commerce is, nevertheless, in companies.
Conservative chief Kemi Badenoch has steered Britain ought to strike a proper commerce settlement with the US, however Reynolds cautioned that the 2 international locations had “very different regulatory regimes for agriculture and food”.
Earlier makes an attempt to forge a UK-US commerce deal foundered on Britain’s refusal to simply accept imports of American hormone-treated beef or rooster dipped in chlorine.
However the enterprise secretary mentioned he hoped there have been many different areas the place the 2 sides might negotiate higher buying and selling phrases, together with working extra carefully in areas resembling skilled companies and know-how.
Reynolds mentioned there have been at all times instances the place retaliatory measures could be thought-about if Britain was focused with tariffs by a 3rd nation. However he warned: “Increasing costs of goods or food for your constituents is not attractive.”
Treasury officers say that chancellor Rachel Reeves additionally believes tariffs harm the nation that imposes them and can make the case without spending a dime commerce. “A trade war doesn’t benefit anyone,” one ally of Reeves mentioned.
Lord Kim Darroch, Britain’s US ambassador throughout the first Trump presidency, mentioned this week that it is likely to be higher to answer any US tariffs by “sucking it up”.
Mel Stride, shadow chancellor, advised Westminster journalists on Thursday: “Tariffs will be inflationary, we are a very open economy and if there are tariffs, certainly if there’s anything that tips into what you might call a trade war, then that will be difficult for world growth.”
In the meantime, Reynolds accepted that many enterprise leaders had been indignant over Reeves’ Price range and the £25bn enhance in employer nationwide insurance coverage contributions, however he insisted they understood why it had occurred.
“Business leaders normally come in to correct a difficult situation,” he mentioned. “They do understand that.”
Whereas he mentioned Reeves had not utterly dominated out future tax rises on this parliament, he mentioned: “The idea that we can always borrow more money and raise more tax — I honestly think we’re at the limit of that.”
Reynolds mentioned he hoped Britain would safe a “very ambitious” enchancment to EU commerce relations, including that the UK ought to search to be on good phrases with Brussels, Washington and Beijing. “That’s an excellent spot for the UK to be in.”
