What are Donald Trump’s tariffs – and how will they affect the UK?
Donald Trump’s steel and aluminium tariffs have come into effect.
But what are they and what do they mean for the UK?
What are tariffs and why does Trump want to impose them?
Tariffs are taxes on goods imported into the US.
The US president wants to impose wide-ranging tariffs on nearest neighbours Mexico and Canada, which he says will help reduce illegal migration and the smuggling of the synthetic opioid fentanyl to the US.
However, most of the 25% duties imposed on the pair to date have been suspended until 2 April.
But two rounds of tariffs on China have been enacted – reflecting trade imbalances and Mr Trump’s battle against fentanyl.
So why is he now targeting steel and aluminium?
On Wednesday, a separate 25% tariff on all steel and aluminium imports to the US came into effect, affecting UK products worth hundreds of millions of pounds.
The steel and aluminium tariffs are designed to protect US manufacturing and bolster jobs by making foreign-made products less attractive.
The world’s largest economy relies on imports of steel and aluminium and Mr Trump wants to change that.
How have countries – including the UK – reacted?
The European Union has announced it will impose retaliatory tariffs on the US.
The European Commission said it will impose “countermeasures” affecting €26bn (£21.9bn) of US goods from 1 April after US tariffs on steel and aluminium came into force today.
The bloc’s tariffs will not only impact US steel and aluminium products, but also textiles, home appliances and agricultural goods.
Please use Chrome browser for a more accessible video player
Trump100 Day 52: Tesla, tariffs and a step closer to truce
Canada has announced 25% retaliatory tariffs on US goods worth C$29.8bn (£16bn) from tomorrow, its country’s finance minister has said.
The tariffs will include steel products worth C$12.6bn (£6.8bn) and aluminium products worth C$3bn (£1.6bn).
Computers, sports equipment and cast iron goods are also among the other products subject to the new retaliatory tariffs.
Announcing the tariffs, Canada’s foreign minister, Melanie Joly, added that Canada will raise the issues of tariffs with European allies to coordinate a response to put pressure on the US.
Please use Chrome browser for a more accessible video player
Trump’s tariffs are ‘disappointing’
While UK industry sees it as a direct attack, the reality is that this country is not a major player any more because energy costs, in particular, mean that UK-produced steel is expensive.
Nevertheless, stainless steel and some high-end products from the UK are in high demand and account for the bulk of the £350m in annual exports to the US.
Sir Keir Starmer has said he is “disappointed” to see Mr Trump impose global tariffs on steel and aluminium, saying the UK will take a “pragmatic approach” and “all options are on the table”.
The business secretary Jonathan Reynolds said on Wednesday morning that while he was disappointed, there would be no immediate retaliation by the UK government as negotiations continue over a wider trade deal with the US.
Why will metal products become more expensive?
It stands to reason that if you slap additional costs on importers in the US, that cost will be passed on down the supply chain to the end user.
If the aluminium to make soft drinks cans costs 25% more, for example, then the hit will have to be felt somewhere.
It could mean that any US product involving steel or aluminium goes up in price, but hikes could be limited if companies decide to take some of the burden in their bottom lines.
Read more on tariffs:
It may be harder for the UK to trump metals tariffs this time round
‘Canadianos’ and cancelled Vegas trips: How Canadians are acting with defiance
What are the prospects for higher prices?
It depends on the extent to which costs are passed down through the supply chain as new tariff regimes and any reciprocal tariffs are deployed.
We do know that Mr Trump plans to fully roll out duties, on all goods, against Mexico and Canada from 2 April. But the White House did row back on a threat to double Canada’s tariff on its steel and aluminium – the biggest exporter – to 50%.
But Mr Trump is also widely expected to target almost all imports from the European Union from the beginning of April.
Please use Chrome browser for a more accessible video player
Trump adviser tells Sky ‘stop that crap’
Is the UK facing further tariffs?
Mr Trump has not explicitly said that the UK is in his sights.
Data shows no great trade imbalances – the gap between what you import and export from a certain country – and UK figures show no trade deficit with the United States.
UK ministers have previously suggested this could be good news for avoiding new levies.
Please use Chrome browser for a more accessible video player
‘The ultimate cost of tariffs will be paid in the US’
Why tariffs could cost you – even if Trump spares UK
Even if no tariffs are put on all UK exports to the US, consumers globally will still be impacted by the wider trade war, particularly in the US.
Economists believe that tariffs will raise costs in the US, sparking a wave of inflation that will keep interest rates higher for longer. The US central bank, the Federal Reserve, is mandated to act to bring inflation down.
More expensive borrowing and costlier goods and services could bring about an economic downturn in the US and have knock-on effects in the UK.
Forecasts from the National Institute of Economic and Social Research (NIESR) predict lower UK economic growth due to higher global interest rates.
It has estimated that UK GDP (a measure of everything produced in the economy) could be between 2.5% and 3% lower over five years and 0.7% lower this year.
The Centre for Inclusive Trade Policy thinktank said a 20% across-the-board tariff, impacting the UK, could lead to a £22bn reduction in the UK’s US exports, with the hardest-hit sectors including fishing and mining.
A nine-year-old girl found dead in Weston-super-Mare has been named on the day police revealed a teenager had been charged with her murder.
Emergency services were called to Lime Close in the Somerset town at 6.09pm on Monday but Aria Thorpe was pronounced dead at the scene.
Police said a 15-year-old boy had been charged with her murder and that a preliminary post-mortem found she died from a single stab wound.
The teenage boy – who can’t be named due to his age – will appear at Bristol Magistrates’ Court later today.
A police cordon remains in place as forensics officers continue their work.
Flowers and tributes have been left at the scene. Pic: PA
Read more from Sky News:
NHS facing ‘worst-case scenario’ as doctors strike
Arrests over plot to steal ‘tonnes’ of charity clothes to fund crime
Superintendent Jen Appleford, from Avon and Somerset Police, said the community was in shock and Aria’s family were being supported by police.
“It is impossible to adequately describe how traumatic the past 36 hours have been for them and we’d like to reiterate in the strongest possible terms their request for privacy,” she said.
Supt Appleford said police were working with local schools and other agencies to make sure support is available.
Britain loves chocolate.
We’re estimated to consume 8.2kg each every year, a good chunk of it at Christmas, but the cost of that everyday luxury habit has been rising fast.
Whitakers have been making chocolate in Skipton in North Yorkshire for 135 years, but they have never experienced price pressures as extreme as those in the last five.
“We buy liquid chocolate and since 2023, the price of our chocolate has doubled,” explains William Whitaker, the real-life Willy Wonka and the fourth generation of the family to run the business.
William Whitaker, managing director of the company
“It could have been worse. If we hadn’t been contracted [with a supplier], it would have trebled.
“That represents a £5,000 per-tonne increase, and we use a thousand tonnes a year. And we only sell £12-£13m of product, so it’s a massive effect.”
Whitakers makes 10 million pieces of chocolate a week in a factory on the much-expanded site of the original bakery where the business began.
Automated production lines snake through the site moulding, cutting, cooling, coating and wrapping a relentless procession of fondants, cremes, crisps and pure chocolate products for customers, including own-brand retail, supermarkets, and the catering trade.
Steepest inflation in the business
All of them have faced price increases as Whitakers has grappled with some of the steepest inflation in the food business.
Cocoa prices have soared in the last two years, largely because of a succession of poor cocoa harvests in West Africa, where Ghana and the Ivory Coast produce around two-thirds of global supply.
A combination of drought and crop disease cut global output by around 14% last year, pushing consumer prices in the other direction, with chocolate inflation passing 17% in the UK in October.
Skimpflation and shrinkflation
Some major brands have responded by cutting the chocolate content of products – “skimpflation” – or charging more for less – “shrinkflation”.
Household-name brands including Penguin and Club have cut the cocoa and milk solid content so far they can no longer be classified as chocolate, and are marketed instead as “chocolate-flavour”.
Whitakers have stuck to their recipes and product sizes, choosing to pass price increases on to customers while adapting products to the new market conditions.
“Not only are major brands putting up prices over 20%, sometimes 40%, they’ve also reduced the size of their pieces and sometimes the ingredients,” says William Whitaker.
“We haven’t done any of that. We knew that long-term, the market will fall again, and that happier days will return.
“We’ve introduced new products where we’ve used chocolate as a coating rather than a solid chocolate because the centre, which is sugar-based, is cheaper than the chocolate.
“We’ve got a big product range of fondant creams, and others like gingers and Brazil nuts, where we’re using that chocolate as a coating.”
The costs are adding up
A deluge of price rises
Brazil nuts have enjoyed their own spike in price, more than doubling to £15,000 a tonne at one stage.
On top of commodity prices determined by markets beyond their control, Whitakers face the same inflationary pressures as other UK businesses.
“We’ve had the minimum wage increasing every year, we had the national insurance rise last year, and sort of hidden a little bit in this budget is a business rate increase.
“This is a small business, we turn over £12m, but our rates will go up nearly £100,000 next year before any other costs.
“If you add up all the cocoa and all the other cost increases in 2024 and 2025, it’s nearly £3m of cost increases we’ve had to bear. Some of that is returning to a little normality. It does test the relevance of what you do.”
-
Sports2 years agoStory injured on diving stop, exits Red Sox game
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports2 years agoGame 1 of WS least-watched in recorded history
-
Sports3 years agoButton battles heat exhaustion in NASCAR debut
-
Sports3 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment3 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment1 year agoHere are the best electric bikes you can buy at every price level in October 2024