Donald Trump announced a new round of tariffs on Thursday ostensibly targeting countries engaged in forced labour practices. The announcement reduced the EU’s previous blanket tariff rate from 15% to 10%, matching the rate agreed in the UK’s economic prosperity deal negotiated by Keir Starmer and Peter Mandelson last year. The UK government stated there was no change to its headline 10% tariff or existing preferential rates in automobiles, pharmaceuticals, and aerospace sectors.
However, trade analysts noted that the tariff restructuring created competitive disadvantages for certain British industries. While the overall rate remained consistent, the EU’s reduction included additional exemptions for items such as cork, diamonds, and other unspecified products including clothing, chemicals, beverages, and gifts. British exporters in these sectors now face combined tariffs exceeding those applied to EU competitors. For example, a UK-manufactured knitted jumper would face a combined 22.5% tariff, while an equivalent EU product would be subject to a flat 10% rate.
The government acknowledged that products where the EU secured better tariff terms represent approximately 10% of total UK exports to the US, valued at roughly £5 billion. Officials noted that the UK was not subject to additional tariff investigations unlike the EU. On a positive note, a separate agreement eliminated tariffs on Scottish whisky exports, providing a competitive advantage over Irish and French spirits producers, which continue to face 10% duties.
William Bain, trade policy director for the British Chambers of Commerce, stated that negotiations should continue between the UK and US to address the disparity. The GMB trade union characterized the tariffs as “ill-judged” and potentially harmful to businesses. EU officials disputed the investigation’s premise regarding forced labour, while additional tariff announcements under section 301 of the Trade Act were anticipated, with potential impacts on pharmaceutical exports from Ireland, Germany, and Belgium.
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