On Thursday morning, UK Prime Minister Keir Starmer convened a roundtable discussion with business leaders, focusing on the implications of “Liberation Day”.
During his remarks to the media, Starmer’s tone was noticeably more assertive. “Last night, the President of the United States acted for his country, and that is his mandate. Today, I will act in Britain’s interests,” he stated, conveying a sense of determination.
Following former President Donald Trump’s decision to impose a 10% tariff on the UK and a 25% tariff on car exports, the atmosphere in Downing Street was reportedly one of “vindication,” especially since these tariffs were less severe than those faced by European counterparts.
Mr. Starmer emphasized that “all options are on the table.” In addition, a comprehensive 417-page document detailing potential US goods that could be subject to retaliatory tariffs was released, encompassing everything from live lambs to Harley-Davidson motorcycles.
Despite the firm rhetoric, immediate action appeared unlikely. The government announced plans to launch a “consultation” with business leaders to evaluate the repercussions of potential retaliatory measures. This consultation will run until May 1, and even afterward, Downing Street has not confirmed if the UK will be ready to act swiftly.
Holding Out Hope
Amidst this process, the UK’s engagement with the US is set to continue, reflecting a persistent hope for reaching a favorable agreement. Former Conservative trade minister Greg Hands supports this strategy. Having participated in the first six rounds of trade negotiations during Donald Trump’s initial term, Hands believes that retaliatory measures would be misguided, as they presume that the opposing party operates under conventional trading principles.
“When I started negotiating with Robert Lighthizer [former US trade representative], he told me, ‘I’m not a free trader’,” Hands recounted, underscoring the complexities at play.
While he acknowledges that we are still in the realm of possibilities, Hands also expresses concern that the EU may pursue retaliatory actions, which could coincide with a UK agreement, offering tangible Brexit benefits for its proponents. However, he warns that this scenario might create significant disparities in tariff rates, potentially straining relations between the UK and EU.
“Brussels might question how the UK can commit to a global rules-based trading system while pursuing a separate deal with Trump,” he explained.
Despite these challenges, Hands firmly believes that the UK’s pursuit of a deal is the right course of action, particularly given the potential implications for the island of Ireland, especially if the EU was to execute significant retaliatory measures.
The UK government has assured businesses in Northern Ireland that they will be able to claim compensation for US goods imported to the North that are not meant for the EU. However, even on an individual consumer level, the repercussions could be significant.
“For instance, if Levi jeans in a Belfast store were 30% cheaper than in Dublin, wouldn’t that lead to cross-border shopping?” he posed.
At present, UK businesses find themselves navigating a landscape filled with uncertainty. Jaguar Land Rover announced over the weekend that it would temporarily halt shipments to the US as it develops its “mid to longer-term plans.”
The British Irish Chamber of Commerce has criticized the US tariffs, forecasting a detrimental impact on 89% of its members across the UK and Ireland. Paul Lynam, the deputy director general, expressed skepticism regarding the rationale behind the tariffs. “Some of the reasons given are absolutely ridiculous,” he remarked, noting points such as VAT and GDPR.
Cool Heads Prevail
Lynam has called for “cool heads” to evaluate the situation and seek the best way forward, stressing the importance of maintaining unity within the EU. He also pointed out that Brexit has equipped Ireland with essential experience for diversifying into different markets, with approximately 20% of the chamber’s members already implementing contingency measures in anticipation of the tariffs.
However, uncertainty remains a pressing issue for businesses throughout the UK and Ireland. Moving forward, Mr. Starmer’s administration plans a dual approach, aiming to negotiate a deal with the US while also working to mend relations with the EU. A special UK-EU summit is scheduled for late May.
Starmer has consistently asserted that he does not need to choose between the EU and the US. Yet, attempting to satisfy both sides may prove to be a challenging balancing act.
Edited By Ali Musa
Axadle Times international – Monitoring.
