How Donald Trump's new tariffs will affect people living in the UK
On Wednesday (12 March) the US imposed a blanket 25 percent tariff on all imports of steel and aluminium.
Back in 2018, Donald Trump had imposed sweeping tariffs of 25 percent for steel and 10 percent for aluminium, but there had been exceptions made for many countries that the US had been allied with.
However, all of the exclusions have since gone and the tariffs have been applied to every country, including the UK.
There had been hopes that the UK would maintain its exception from being hit with the measure but it wasn't to be.
Advert
If you're wondering what this all means, why it's happening and how it'll impact the UK then let us tell you all about it.
How do tariffs work?
Tariffs are taxes imposed by a country on things it imports from other countries.
This makes importing goods from other countries more expensive, so while a country can use it to raise some money, what it's most often used for is to make foreign goods more expensive and encourage people to buy from domestic sources.
Tariffs tend to be paid by those who import the goods, so while Trump's tariffs will affect goods from other countries it'll be those in the US buying them who'll have to pay the tariff.
In general those having to pay tariffs won't just absorb the extra cost but instead raise their prices, so those buying goods from abroad that have to pay new tariffs on them will likely turn around and pass those costs onto their customers.
What has Trump placed tariffs on in the UK?
He's put various different tariffs on various different countries, but as far as the UK is concerned the US has hit steel and aluminium with a 25 percent tariff.
Unfortunately we can't get around the latter one by saying that the US calls it 'aluminum'.
These tariffs cover not just raw material trade with the US but products made with these metals.
Think of the things that have steel or aluminium in them, if you want to sell those to the US it's now going to be subject to tariffs.
How does that affect the UK?
The BBC reports that the UK sold about £470 million worth of raw steel and aluminium to the US last year.
However, since the tariffs extend to products made with the metals it's thought that another £2.2bn worth of goods will be covered by the new measures.
That's not much of the around £58 billion of goods the UK exports to the US on an annual basis, but the impact may be felt by those businesses that specifically work with steel and aluminium.
While it won't be UK companies exporting these goods to the US that directly pay the costs of the tariffs, it will likely make British products more expensive in the US market and thus less appealing.
In essence, British companies that sell steel and aluminium to the US are going to be impacted, and then other companies that are connected with them are also likely to feel it.
Chairman of the Business and Trade Committee Liam Byrne said that Trump's tariffs were 'double trouble' for the UK.
He claimed that in addition to impacting hundreds of millions of pounds worth of steel and aluminium sales to the US the tariffs would 'also risk swamping the UK with over-subsidised Chinese steel diverted from America'.
William Bain, head of trade policy for the British Chambers of Commerce (BCC), told LADbible Trump's tariffs would usher in a 'new age of uncertainty' that would make for a 'really worrying and uncertain time'.
"Things like tinfoil, a sofa that's got a steel frame in it, construction materials that have steel plus a concrete element in it...it's goods that have steel in them which are now affected as well," he said.
"So there's a big range of companies affected by it, and it is a concern.
"Things will correct themselves over time. Companies are putting strategies in place, they'll look at diversifying trade as well. So they'll adjust, but it could be a painful few weeks or months ahead."
Why is Trump doing this?
In theory going protectionist over steel and aluminium will help protect US businesses in this industry from competition that comes from abroad.
The US imports lots of steel and aluminium and Trump may want to shift things more towards domestic production.
Reuters reports that around a quarter of all steel and about half of all aluminium used in the US is imported.
He also seems to be a big fan of tariffs in general, having applied them to various countries since starting his second term in the White House.
He also seems to think that the US is getting a bad deal from their current trade agreements.
Writing on his Truth Social platform he said: "The US doesn’t have Free Trade. We have ‘Stupid Trade’. The Entire World is RIPPING US OFF!!!"
When he addressed congress earlier this month he said: "Tariffs are about making America rich again and making America great again. And it’s happening and it will happen rather quickly.
"There will be a little disturbance, but we’re ok with that."
Trump has also suggested that the income from tariffs could replace income tax in the US, which is quite unlikely.
The US imports about $3 trillion worth of goods a year and collects about raises about $2 trillion in income tax a year, and experts have said that it would take 'implausibly high' tariffs to even come close to replacing income tax and pointed out that it would be 'literally impossible' to achieve since people wouldn't want to buy goods with these astoundingly high tariffs on them.
Plus the costs would still be passed onto the general public anyway, so it wouldn't save average people any money at all.
How has the UK government responded?
While other countries have responded to tariffs and threats of tariffs from the US by imposing restrictions of their own, the UK has thus far not responded to Trump's tariffs.
When the EU put a reciprocal tariff on US goods including bourbon, Trump threatened to impose a 200 percent tariff on champagne and other wines from the EU.
Prime Minister Sir Keir Starmer said it was 'pragmatic' not to hit back at the US, saying that the UK was discussing the possibility of a wider scope trade deal with the US that would remove tariffs as part of an agreement.
He said: "Obviously I’m disappointed to see tariffs, global tariffs, in relation to steel and aluminium.
"But I’m going to take a pragmatic response to this, because we are negotiating and talking about an economic deal and agreement as we speak.
"Of course, in the end, all options are on the table, but my response is to keep my feet on the ground, to be pragmatic, to keep ensuring that we keep our eyes on the prize.
"The prize is not a tariff war, which I don’t think is going to be in our interests.
"The prize is an economic agreement or deal, if we can reach that, that actually covers tariffs and much more besides."
Topics: US News, UK News, Donald Trump, Keir Starmer, Money, Politics, World News
Joe Harker