Sir Keir Starmer has emphasized the readiness of his government to utilize industrial policy to protect British businesses from the impact of Donald Trump’s new 10% tariff.
Following the president’s announcement on 2 April, which he dubbed ‘Liberation Day’, the UK, along with other countries, faces the lowest import duty rate, while nations like Vietnam, Cambodia, and China are subjected to higher US levies.
However, engaging in a global trade war will have negative repercussions on the UK’s open economy.
Prime Minister Keir mentioned that “these new times demand a new mentality” after the 10% tax on British imports into America went into effect on Saturday. Additionally, a 25% US levy on all foreign car imports was introduced on Thursday.
Jaguar Land Rover has announced a temporary halt in shipments to the US as companies struggle to navigate the new taxes.
Over the weekend, the car manufacturer stated its commitment to “address the new trading terms” and explore strategies for the mid to long-term.
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Jobs fears as Jaguar halts shipments
Sir Keir stressed that “the immediate priority is to keep calm and strive for the best deal” in response to the tariffs.
In an article for The Sunday Telegraph, he expressed the government’s commitment to enhancing domestic competitiveness through accelerated plans and utilizing industrial policy to shield British businesses from the storm.
Reports suggest that several announcements will be forthcoming as ministers aim to stimulate growth.
NI contribution rate for employers goes up
Effective from Sunday, the employer NICs rate increased from 13.8% to 15%.
Furthermore, businesses will face higher costs due to the government’s reduction of the salary threshold at which NICs kick in, from £9,100 to £5,000.
The FTSE 100 experienced its worst trading day since the start of the pandemic on Friday, with banks being among the hardest hit firms.
Sir Keir affirmed: “This week, the government will take all necessary actions to safeguard Britain’s national interest. Our focus on delivering for Britain remains unwavering amidst global economic uncertainties. These changing times require a new approach.”
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Trump defiant despite markets
UK spared highest tariff rates
The highest rates have been imposed on countries considered “worst offenders”, including some in Southeast Asia. Cambodia faces a 49% tariff on imports, Vietnam 46%, and China 34%. French imports will be subject to a 20% tariff, aligned with European Union nations, becoming effective on 9 April.
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Red wall on Wall Street – but Trump remains undeterred
How will the UK react to Trump’s tariffs?
Over the weekend, Sir Keir engaged in conversations with foreign leaders, including French President Emmanuel Macron, Italian Prime Minister Giorgia Meloni, and Australian Prime Minister Anthony Albanese, to address the impact of the tariff changes.
A spokesperson from Downing Street commented on the discussion between Sir Keir and Macron, stating: “Both leaders agreed that a trade war is detrimental to all parties, but all options should be considered, and businesses should remain informed of developments.
“They also expressed concerns about the global economic and security implications, particularly in Southeast Asia.”
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Trump’s warning
Despite acknowledging the difficulty, Mr. Trump has urged Americans to endure the tariffs to bring back jobs and businesses, heralding an economic revolution.
In a post on his Truth Social platform, he highlighted the significant investments and expressed confidence in a successful outcome.
“THIS IS AN ECONOMIC REVOLUTION, AND WE WILL WIN. HANG TOUGH, it won’t be easy, but the end result will be historic.”