Trump’s tariff plan would hit UK commerce as arduous as Brexit, assume tank warns | EUROtoday

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Sign as much as our Brexit electronic mail for the most recent perception

Donald Trump’s threatened tariffs might hit UK commerce with the US as badly as Brexit affected commerce with the EU, a number one assume tank has warned, as campaigners name for Sir Keir Starmer to guard the UK by urgently rebuilding ties with Europe.

The president-elect has threatened to impose tariffs of between 10 and 20 per cent on all imports to the US when he returns to the White House, with specialists warning of a tit-for-tat world commerce struggle that might gasoline one other spike in inflation.

And, in a bombshell report printed at this time, the Resolution Foundation mentioned the influence of Trump’s plans would hit UK corporations as arduous because the commerce boundaries that got here into place after Brexit.

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In a warning to Sir Keir forward of Mr Trump’s inauguration subsequent month, the Resolution Foundation mentioned constructing nearer ties with the EU “should remain a priority”, with 47 per cent of all UK exports heading for the bloc.

Its report famous that the influence on corporations that export items to the US below Mr Trump’s plans may very well be devastating, with 10 to twenty per cent tariffs on items being roughly equal in scale to the non-tariff boundaries that Brexit imposed on items gross sales to the EU.

And it mentioned if Mr Trump pursues “super-tariffs” on rivals corresponding to China, resulting in retaliation, “the knock-on effects could be darker still”.

“No longer part of a large trading bloc, the UK would then face sharp dilemmas in a scramble to retain access to overseas markets and its flow of imports,” the report mentioned.

The image is especially stark for small merchants, with items gross sales to Europe amongst smaller companies having fallen 30 per cent since Brexit – with 20,000 corporations stopping exporting to the continent altogether.

Resolution Foundation senior economist Emily Fry mentioned: “While Trump tariffs wouldn’t affect the UK economy as a whole as much as Brexit, their effect on firms who sell goods to the US could be stark.”

The report comes amid Sir Keir’s effort to reset relations with Brussels, after years of acrimony below the Conservatives. But in a serious speech on Monday night time, the PM rejected calls to prioritise the EU over the US below Mr Trump.

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Addressing the Lord Mayor’s Banquet at Mansion House, the prime minister made it clear that he believes the selection being posed is a false one and that he can obtain nearer relationships with each allies.

He added: “Against the backdrop of these dangerous times, the idea that we must choose between our allies, that somehow we’re with either America or Europe, is plain wrong. I reject it utterly.”

Former member of the European parliament Molly Scott Cato advised The Independent that Britain had already engaged within the “economic self-harm” of Brexit, including that “now we face an impact on a similar scale from Trump’s tariffs”.

The economist and vice chair of the European Movement UK added: “This report is a timely reminder that we need to end the silence around the costs of Brexit and start a conversation about how to reverse the damage as well as defending our businesses against Trump’s trade war.

“Reducing trade frictions is a useful start, but it is clear that our best protection would be taking our place as part of the powerful EU trading bloc and joining the customs union.”

And Naomi Smith, chief government of marketing campaign group Best for Britain, mentioned: “Facing new trade tariffs from an unpredictable President-elect Trump, this report is right to recommend the government pursue a closer trading relationship with our European neighbours as an absolute priority.

“Breaking down Brexit barriers with our largest and closest market, through beneficial alignment, is essential to protecting our economic interests by bringing down costs for British businesses and consumers alike.”

The Resolution Foundation’s report additionally discovered that Brexit has pushed a commerce divide between Britain’s struggling items sectors and its powerhouse companies industries.

Firms working in areas like promoting, IT and consultancy have discovered it simpler to work round Brexit than items exporters who can’t keep away from transport prices and border checks, the assume tank mentioned.

Goods exports have risen by simply 0.3 per cent a 12 months since 2019, far decrease than the 4.2 per cent common enhance for superior economies; in the meantime, companies exports have risen a lot sooner than rivals – rising by 7.5 per cent a 12 months since 2019.

Ms Fry added: “With the dust still settling on how Brexit has changed how firms trade, the threat of universal tariffs on goods by the president-elect risks widening this trade divide further.”

The prospect of tariffs being imposed by Mr Trump has led commerce specialists to warn that the UK wants to maneuver nearer to the EU.

Simon Sutcliffe, customs and excise responsibility companion at enterprise advisory agency Blick Rothenberg, mentioned: “Not since the 1930s with the Smoot-Hawley Act has the US considered such a protectionist trade policy. This leaves Keir Starmer with a dilemma. Who does he build closer trading ties with, the US or the EU?”

He added: “Keir Starmer’s manifesto states that he will build better relations with the EU. One of the biggest stumbling blocks in the UK’s trading relationship with the EU is the control and administration surrounding the movement of food products. Moving closer to the EU may allow development of a consistent and streamlined food policy which would reduce trade red tape and extra charges.”

Meanwhile, Britain’s main commerce skilled Marco Forgione, director normal of the Chartered Institute of Export and International Trade, has disputed claims a Trump commerce struggle will essentially be dangerous for the UK.

He mentioned: “The UK will be low on Trump’s list of priorities for tariffs. It is clear he is mainly aiming at China and countries which want to de-dollarise. Also the EU is higher up on his target list because of his negative feelings towards it.

“The UK could get a special agreement even if it is just building on the memorandums of understanding with different states. Most of the UK exports to the US are services anyway.”

The Treasury was approached for remark.