Week commencing 17 February
Update 19 February, 10:00: US president Donald Trump has proposed the next phase of his protectionist trade policy, telling reporters he plans to levy a 25% tariff on all imports of cars, pharmaceuticals and semiconductors.
Speaking during a press conference yesterday (18 February), Trump responded to a question on whether he had decided “what the auto tariff rate should be”:
“It’ll be in the neighbourhood of 25%.”
Asked the same question for pharmaceuticals and semiconductors, he said “It’ll be 25% and higher and it’ll go very substantially higher over the course of the year.”
Trump said that there would “probably” be more clarity on tariff details on 2 April. The date coincides with the end of an investigation Trump ordered last week (13 February) into other nations’ tariff policies, with reciprocal tariffs expected for nations deemed to be applying too high a rate on US imports.
Trump added that a delay to the introduction of the new rates to give manufacturers time to move production to the US.
“When they come into the US and they have their plant or factory here, there is no tariff.”
Firing line
Bloomberg reports that Mexico and South Korea are two of the most exposed to the most recent announcement, with their car exports to the US totalling 2.4% and 1.8% of GDP, respectively.
Malaysia and Singapore are some of the most vulnerable to semiconductor tariffs, with Malaysia sending US$136bn worth of chips to the US in 2024.
Indian pharmaceutical companies are also exposed to the tariff proposals, with the US serving as the sector’s biggest importer. Reuters reports that an index of shares from Indian pharma firms fell 2% following Trump’s announcement.
Last year, Indian pharma exports reached $8.7bn at the end of 2024’s fiscal year, the equivalent of 31% of the industry's overall exports.
However, Ireland would be most affected as the largest exporter of pharmaceutical products to the US.
The BBC reported that amid “surging” exports across the Atlantic, Ireland’s Central Statistics Office found that in 2024 exports of medical and pharmaceutical products rose by €22.4bn or 29%, reaching almost €100bn.
Rising total exports to the US created a goods trade surplus which many worried would attract Trump’s attention, amid his overarching aim to reverse the country’s global trade deficit.
Update 17 February, 11:00: Jonathan Reynolds, the UK business and trade secretary, has said that the imposition of the US’ new universal 25% tariff on steel and aluminium could have a “negative” effect “for ourselves” and “for the US as well”.
Speaking to the BBC’s Laura Kuenssberg, Reynolds said that the UK sends “specialised, relatively niche” steel products to the US that the country would be unable to procure elsewhere:
“Some of the things the US imports, it hasn’t got alternative suppliers for, the submarine casings that come from Sheffield, for instance, to the US Navy. I don’t want them paying more needlessly for that, so we can engage, and we’ve already been doing that.”
As the Standard reports, Reynolds suggested that there could be a “basis for constructive engagement” on avoiding the tariffs, as a result of the UK goods’ strategic value to the US.
While he said he appreciates that the new US administration “[has] a mandate for changing how they approach the issues of trade”, he said that the UK government has “a different argument, a different story to tell, to the EU or to China in relation to our trading relationships”.
Some smaller UK firms are also set to face new duties on exports to the US as a result of a planned rule change that will see import duty charged on lower-value, Chinese-made packages entering the country. The Guardian notes that packages worth less than US$800 entering the US were previously exempt from the duty before the proposed change, which also includes an additional 10% tariff.
Brad Ashton of advisory company RSM said the change “is creating a perfect storm for online retailers putting goods into the US market”, particularly British brands that manufacture their goods in China. He added:
“Businesses will see their margins eroded because costs will increase. We may get to a point where the changes make a UK business uncompetitive in selling to the US.”
Week commencing 10 February
Update 13 February, 11.00: Indian prime minister Narendra Modi is visiting the US today in a bid to strengthen ties and potentially to see off the threat of tariffs.
As noted by the Guardian, India’s foreign minister, Vikram Misri, said in remarks to journalists that Trump’s extension of an invite to Modi to visit “within barely three weeks of the new administration taking office shows the importance of the India-US partnership”.
However, the visit comes after Trump said India was a “very big abuser” of the US on trade over high tariffs placed on imports. A 25% tariff on steel and aluminium introduced by Trump last week on imports to the US could have a major effect on India too, meanwhile, as the Indian Steel Association says it is “expected to slash exports to the US by 85%”.
Trump’s administration may have cause for concern elsewhere, meanwhile, as US inflation rose more than expected in January, hitting 3%. Economists predicted it would reach 2.9%, the BBC reports.
Groceries in the country rose 0.5% last month, while other essentials including car insurance and medicine also increased in price. It was the largest monthly price increase in over a decade in the US, according to the government’s labor department.
Update 11 February, 11.00: Lord Peter Mandelson, the new UK ambassador to the US, has said he is “concerned” about the possibility of US tariffs on UK goods, as president Donald Trump continues imposing new levies on imports.
In conversation with the BBC, he said the UK has a “very balanced trade relationship with the US”, which he said suggested tariffs are not “actually directly targeted at us”, but noted that it was important not to be “complacent”.
He said it is crucial to avoid becoming “collateral damage” in a trade war while also avoiding “overreacting”. Trump’s “warm personal relationship” with prime minister Sir Keir Starmer creates a platform to do so.
No exceptions
It comes after Trump emphasised there would be no exceptions to new 25% tariffs on imports of steel and aluminium.
The president signed new executive orders yesterday (10 February) that simplify the tariffs on the two metals "so that everyone can understand exactly what it means”. The new rate applies “without exceptions or exemptions” to “all countries, no matter where it comes from, all countries”.
Trump suggested he would give “great consideration” to a request from Australia for an exemption, as it has a trade deficit with the US.
Trump has said “I don't mind” in response to questions over potential tariff retaliation from other markets.
European Commission president, Ursula von der Leyen, said that the “unjustified tariffs on the EU will not go unanswered—they will trigger firm and proportionate countermeasures.”
