Business and Trade Secretary Jonathan Reynolds has admitted Donald Trump’s trade plan is a “greater” danger to the UK than countries similar to us.
The Cabinet minister said the impact on the UK will be “significant” and that there was “real risk for us”. He admitted he was worried about a tariff war depending on how the US president-elect proceeds with his plans.
Mr Trump, who will officially return to the White House on Monday, has said he will slap new tariffs on goods entering the US. He has already said he will sign an executive order for a 25% tariff on all goods coming from Canada and Mexico on his first day in office.
A tariff is a tax added onto goods as they enter a country. If Mr Trump’s changes come in, the domestic company importing the goods must pay the tax to the US government. It will mean they will either take a hit to their profits or they will pass down the extra costs to customers, raising prices. Other countries are expected to retaliate with tariffs on the US.
A recent report warned that Mr Trump’s tariffs could hit the UK as severely as Brexit. Here Mr Reynolds answers your questions on the impact of Mr Trump’s plans on the UK.
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AFP via Getty Images)
Danger to UK
Mr Reynolds did not shy away from the risks of tariffs on the UK – and admitted that we could be more at risk to dangers because of how much we trade on a global scale. He said he has already been engaging with the incoming Trump administration to try to plan for future policies.
Asked if he was looking forward to Mr Trump’s return to the White House, the business minister told Sky News: “Well I think it’s going to be a challenging time for anyone who is responsible for trade in a big economy because of some of those pledges that were in the campaign. But I think there are opportunities for the UK in this. there’s lots of things that I, as Business and Trade Secretary, would like to see the UK doing more closely with the US, in areas like technology, digital trade.”
Pressed if he was worried about a tariff war, Mr Reynolds said: “I am, because the UK is a very globally-orientated economy, so the exposure, the danger to the UK is actually greater than even some comparable countries around that. So a lot of our work has been preparing for that, engaging early with the new administration.
“If you look at their their take on tariffs and why they put that forward, it’s a huge concern in the US, and this new administration, for the trade deficits they’ve got with China and EU. That doesn’t apply to us, so we’re in a different position to some of the European countries or other partners and allies of the US. But we can’t be complacent and we’re very well prepared for that.”
Car industry concerns
Mr Reynolds suggested the UK’s car industry was at risk because it relies heavily on exports. He admitted it was an area ministers have to be “really careful” about, with relationships with other countries crucial to its success.
Asked about the impact on it if tariffs come in, he said: “Well, for the UK car industry, which is a jewel in the crown of our economy. It’s a very export-orientated economy. We’ve got firms that sell a lot to the US, a lot to China, a lot into the EU. So when you’re responsible for that, you’ve got to be really careful about making sure your relationship with one country doesn’t damage our relationship with another.
“And that’s why I want to see the UK at the absolute heart of being able to trade with the US, with the EU, with China, with India, with the Gulf as well and other parts of the world. But you’re right to say that’s an area where we’ve got to be very careful to make sure we’re giving ourselves the platform we need to succeed in each of those markets.”
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PA)
Impact on people’s jobs
When businesses are financially hit, there is a potential that jobs are impacted too. Asked if Mr Trump’s plans could cost jobs, Mr Reynolds admitted we can’t be “complacent” and there are “risks” if a tariff war breaks out. “Ultimately tariffs are paid for by your own people, so it’s got real pressures in terms of inflation, in terms of your ability to employ people, to export to other markets,” he said.
“Free trade is a good thing, reducing tariffs, whichever partner that is, is important. So look, we are well prepared for this. We’ve got a good argument to make, and I think there’s a chance, actually if we play this right, to get even better relationships out of some of these things that we put forward. But we can’t be complacent. There are risks, yes, of a tariff war between friends, allies and other parts of the world.”
Current UK economy
Elsewhere this morning, Mr Reynolds was pressed on the performance of the UK economy more widely. He admitted he was “not satisfied” by sluggish growth figures for November. The Office for National Statistics (ONS) estimated the UK economy grew in November by 0.1% after falling by 0.1% in both September and October. While a welcome return to growth, most economists were expecting gross domestic product (GDP) to rebound by 0.2% in November.
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He said: “The economy is growing. Inflation down yesterday, government borrowing costs going down yesterday. Look, all of that’s good – it’s an endorsement of the plan for change. But I’m not satisfied. I want more. I think people underestimate how committed this government is to making, at times, would have been too difficult decisions in British politics to get growth where it needs to be, and that is what this government’s committed to.
“We’ve got the regulators coming in today as part of that conversation, our agenda on skills, industrial strategy, trade, planning. It’s all about this. So of course, the economy growing is good news. Of course inflation coming down is good news. But we’re very, very ambitious and determined for the future.”
He also praised a £50million investment deal secured between JATCO, Nissan and the UK government to build new manufacturing site in Sunderland. “There’s a lot to do to turn around what has been a decade and a half of disappointing economic performance in the UK, but we’re seeing a real endorsement of the government’s plan for change of our ambitions around growth from these kids of investments.”