Connect with us

Published

on

The US president has promised to target countries which charge tax on US imports by matching them with a reciprocal tariff.

Donald Trump has ordered his team to start calculating duties by early April – increasing fears of a global trade war that could also accelerate US inflation.

“On trade, I have decided for purposes of fairness, that I will charge a reciprocal tariff, meaning whatever countries charge the United States of America, we will charge them. No more, no less,” he posted on Truth Social.

Please use Chrome browser for a more accessible video player

What is America’s trade position?

It is set to spark negotiations with dozens of countries aimed at lowering their tariffs and trade barriers. The US wants to shrink its goods trade deficit which topped $1.2trn (£954bn) last year.

A White House official said that countries with large US trade surpluses could be targeted first. The top five are China, Mexico, Vietnam, Ireland and Germany, according to the US Census Bureau.

Trump’s total trade war


Paul Kelso - Health correspondent

Paul Kelso

Business and economics correspondent

@pkelso

Taken at face value Donald Trump’s embrace of reciprocal tariffs is a declaration of total trade war.

It would amount to perhaps the single biggest peacetime shock to global commerce.

In promising to levy import taxes on any nation that imposes tariffs or VAT on US exports, he is following through on a campaign promise.

The aim is to address a near trillion dollar trade deficit – the difference between the value of America’s exports and its imports – that he believes amounts to a tax on American jobs.

In response, he wants to deploy tariffs to simultaneously ease the US deficit and – in theory – price out imports in favour of domestic production.

His primary targets appear to be the major trading partners with whom the trading deficit is greatest.

It is a blow to the emerging view in Whitehall that Britain might wriggle through the chaos relatively unscathed.

Read more from Paul here.

UK government minister Pat McFadden told Sky News’ Politics Hub with Sophy Ridge that Britain will take a “wait and see” approach when it comes to the tariffs. He refused to say if the government would retaliate.

Trump latest: New tariffs signal ‘total trade war’

More on Donald Trump

The UK could be hit with tariffs as high as 24% if Mr Trump follows through on his threats to treat VAT as a tariff, according to Paul Ashworth, chief North America economist at Capital Economics.

Although some estimates are lower, he thinks Britain would be the fourth hardest hit, following India (29%), Brazil (28%) and the EU (25%).

This is based on VAT rates combined with existing tariffs, but the Trump administration also intends to take into account regulations, government subsidies, digital services taxation policies and exchange rate policies.

Read more from Sky News:
Trump wants Russia to return to G7
Ukraine peace talks risk short-term win

“Most people would consider VAT to be a non-discriminatory tax since it is also applied to domestically-produced goods making a level playing field,” said Mr Ashworth.

But the US still argues that VAT is a form of discriminatory tariff because America applies a much lower average sales tax at state level.

India's Prime Minister Narendra Modi speaks as President Donald Trump listens during a news conference in the East Room of the White House, Thursday, Feb. 13, 2025, in Washington. (AP Photo/Ben Curtis)
Image:
Narendra Modi and Donald Trump at the White House. Pic: AP

On Thursday, Mr Trump also held a meeting with Indian Prime Minister Narendra Modi, agreeing to join forces on artificial intelligence, semiconductors and strategic minerals.

During a news conference afterwards, Mr Trump said India has been “very strong on tariffs” and “it’s very hard to sell into India”, adding: “They’re going to be purchasing a lot of our oil and gas.”

India’s tariff rates are the highest, according to the World Trade Organisation, with a simple average 17% rate for all products compared to 3.3% for the US.

Continue Reading

Business

Tesla approves $29bn share award to Elon Musk

Published

on

By

Tesla approves bn share award to Elon Musk

Tesla’s board has signed off a $29bn (£21.8bn) share award to Elon Musk after a court blocked an earlier package worth almost double that sum.

The new award, which amounts to 96 million new shares, is not just about keeping the electric vehicle (EV) firm’s founder in the driving seat as chief executive.

The new stock will also bolster his voting power from a current level of 13%.

Money latest: Ryanair check-in change this autumn

He and other shareholders have long argued that boosting his interest in the company is key to maintaining his focus after a foray into the trappings of political power at Donald Trump‘s side – a relationship that has now turned sour.

Musk is angry at the president’s tax cut and spending plans, known as the big beautiful bill. Tesla has also suffered a sales backlash as a result of Musk’s past association with Mr Trump and role in cutting federal government spending.

Tesla Inc CEO Elon Musk onstage during an event for Tesla in Shanghai, China. Pic: Reuters
Image:
Tesla’s Elon Musk is seen on stage during an event in Shanghai Pic: Reuters

The company is currently focused on the roll out of a new cheaper model in a bid to boost flagging sales and challenge steep competition, particularly from China.

More on Donald Trump

The headwinds have been made stronger as the Trump administration has cut support for EVs, with Musk admitting last month that it could lead to a “few rough quarters” for the company.

Read more:
Tesla faces losing billions after Musk-Trump fallout

Please use Chrome browser for a more accessible video player

Could Trump cost Tesla billions?

Tesla is currently running trials of its self-driving software and revenues are not set to reflect the anticipated rollout until late next year.

Musk had been in line for a share award worth over $50bn back in 2018 – the biggest compensation package ever seen globally.

But the board’s decision was voided by a judge in Delaware following a protracted legal fight. There is still a continuing appeal process.

Earlier this year, Tesla said its board had formed a special committee to consider some compensation matters involving Musk, without disclosing details.

The special committee said in the filing on Monday: “While we recognize Elon’s business ventures, interests and other potential demands on his time and attention are extensive and wide-ranging… we are confident that this award will incentivize Elon to remain at Tesla”.

It added that if the Delaware courts fully reinstate the 2018 “performance award”, the new interim grant would either be forfeited or offset to ensure no “double dip”.

The new compensation package is subject to shareholder approval.

Continue Reading

Business

Motor finance operators can breathe big sigh of relief

Published

on

By

Motor finance operators can breathe big sigh of relief

Bank stocks have enjoyed a boost as traders digest the Supreme Court’s ruling on the car finance scandal.

Some of the country’s most exposed lenders, including Lloyds and Close Brothers, saw their share prices jump by 7.55% and 21.62% respectively.

It came after the court delivered a reprieve from a possible £44bn compensation bill.

Money latest: Ryanair check-in change this autumn

Banks will still most likely have to fork out over discretionary commissions – a type of commission for dealers that was linked to how high an interest rate they could get from customers.

The FCA, which banned the practice in 2021, is currently consulting on a redress scheme but the final bill is unlikely to exceed £18bn. Overall, the result has been better than expected for the banks.

Please use Chrome browser for a more accessible video player

Car finance ruling explained

Lloyds, which owns the country’s largest car finance provider Black Horse, had set aside £1.2bn to cover compensation payouts.

Following the judgment, the bank said it “currently believes that if there is any change to the provision, it is unlikely to be material in the context of the group”.

Please use Chrome browser for a more accessible video player

‘Don’t use a claims management firm’

The judgment released some of the anxiety that has been weighing over the Bank’s share price.

Jonathan Pierce, banking analyst at Jefferies, said the FCA’s prediction was “consistent with our estimates, and most importantly, we think it largely de-risks Lloyds’ shares from the ‘motor issue'”.

Read more:
Martin Lewis explains compensation qualification
How to tell if you’ve been mis-sold

Bank stocks have responded robustly to each twist and turn in this tale, sinking after the Court of Appeal turned against them and jumping (as much as 8% in the case of Close Brothers) when the Supreme Court allowed the appeal hearing.

Concerns about this volatility motivated the Supreme Court to deliver its judgment late in the afternoon so that traders would have time to absorb the news.

Continue Reading

Business

FCA considering compensation scheme over car finance scandal – raising hopes of payouts for motorists

Published

on

By

FCA considering compensation scheme over car finance scandal - raising hopes of payouts for motorists

Thousands of motorists who bought cars on finance before 2021 could be set for payouts as the Financial Conduct Authority (FCA) has said it will consult on a compensation scheme.

In a statement released on Sunday, the FCA said its review of the past use of motor finance “has shown that many firms were not complying with the law or our disclosure rules that were in force when they sold loans to consumers”.

“Where consumers have lost out, they should be appropriately compensated in an orderly, consistent and efficient way,” the statement continued.

Read more: How to tell if you’ve been mis-sold car finance

The FCA said it estimates the cost of any scheme, including compensation and administrative costs, to be no lower than £9bn – adding that a total cost of £13.5bn is “more plausible”.

It is unclear how many people could be eligible for a pay-out. The authority estimates most individuals will probably receive less than £950 in compensation.

The consultation will be published by early October and any scheme will be finalised in time for people to start receiving compensation next year.

What motorists should do next

The FCA says you may be affected if you bought a car under a finance scheme, including hire purchase agreements, before 28 January 2021.

Anyone who has already complained does not need to do anything.

The authority added: “Consumers concerned that they were not told about commission, and who think they may have paid too much for the finance, should complain now.”

Its website advises drivers to complain to their finance provider first.

If you’re unhappy with the response, you can then contact the Financial Ombudsman.

The FCA has said any compensation scheme will be easy to participate in, without drivers needing to use a claims management company or law firm.

It has warned motorists that doing so could end up costing you 30% of any compensation in fees.

The announcement comes after the Supreme Court ruled on a separate, but similar, case on Friday.

The court overturned a ruling that would have meant millions of motorists could have been due compensation over “secret” commission payments made to car dealers as part of finance arrangements.

Please use Chrome browser for a more accessible video player

Car finance scandal explained

The FCA’s case concerns discretionary commission arrangements (DCAs) – a practice banned in 2021.

Under these arrangements, brokers and dealers increased the amount of interest they earned without telling buyers and received more commission for it. This is said to have then incentivised sellers to maximise interest rates.

In light of the Supreme Court’s judgment, any compensation scheme could also cover non-discretionary commission arrangements, the FCA has said. These arrangements are ones where the buyer’s interest rate did not impact the dealer’s commission.

This is because part of the court’s ruling “makes clear that non-disclosure of other facts relating to the commission can make the relationship [between a salesperson and buyer] unfair,” it said.

It was previously estimated that about 40% of car finance deals included DCAs while 99% involved a commission payment to a broker.

Read more:
Storm Floris to hit the UK with 90mph winds
Teenagers arrested over murder of 19-year-old

Nikhil Rathi, chief executive of the FCA, said: “It is clear that some firms have broken the law and our rules. It’s fair for their customers to be compensated.

“We also want to ensure that the market, relied on by millions each year, can continue to work well and consumers can get a fair deal.”

Continue Reading

Trending