UK not planning retaliatory tariffs on US ‘at the moment’, Rachel Reeves says

The UK is not planning “at the moment” to introduce retaliatory tariffs on the US, Chancellor Rachel Reeves has said after Donald Trump imposed a new trade tax on car imports.

A 25% tariff on vehicles imported to the US will come into effect on April 2, the US president announced on Wednesday.

Ms Reeves told Sky News: “We’re not at the moment at a position where we want to do anything to escalate these trade wars.

“Trade wars are no good for anyone. It will end up with higher prices for consumers, pushing up inflation after we’ve worked so hard to get a grip of inflation, and at the same time will make it harder for British companies to export.”

She went on: “We are looking to secure a better trading relationship with the United States. I recognise that the week ahead is important. There are further talks going on today, so let’s see where we get to in the next few days.”

In an interview with Times Radio, the Chancellor said free trade is “good for both of our countries”.

Intertwined

She added: “A million British people work for American firms. A million Americans work for British firms. Our two economies are so closely intertwined.”

The Liberal Democrats called on the Government to “toughen up” and start placing retaliatory tariffs on US carmakers like Tesla.

The party’s deputy leader Daisy Cooper told BBC Radio 4’s Today programme: “I think there’s only one language that Donald Trump understands, and that is the language of strength.

“What we Liberal Democrats are very concerned about is that the Government strategy so far seems to be to cower in the corner and just ask Donald Trump to be nice to us, and just to hope that he doesn’t do anything nasty.

“That is not a strategy. So, we think the Government needs to toughen up.

“We think the Government needs to start preparing for retaliatory tariffs, and that those tariffs, that preparation, should start by looking at putting tariffs on Tesla cars, because clearly Elon Musk is a huge backer of Donald Trump, and that’s where we would start.”

Around four out of five cars made in the UK are exported.

Tariffs

Figures from industry body the Society of Motor Manufacturers and Traders (SMMT) show the US is the second largest export market after the European Union for cars built in the UK.

Some 16.9% of UK car exports were to the US last year.

Jaguar Land Rover could be one of the UK vehicle manufacturers most affected by tariffs.

SMMT chief executive Mike Hawes said the announcement of tariffs was “not surprising but, nevertheless, disappointing” and urged both governments to strike a deal that avoids further damage.

“If, as seems likely, additional tariffs are to apply to UK-made cars, it’s a blow to a long-standing and productive relationship,” he said.

The tariffs announced by the Trump administration could also create issues for US car firms.

Many source their components from across the globe – meaning they could be faced with higher prices.

At close of trading on Wednesday, shares in General Motors had fallen 3.1% while shares in Stellantis – the owner of Jeep and Chrysler – were 3.6% down.

Ford’s stock closed 0.1% higher.