The UK is set to avoid US trade tariffs, despite president Donald Trump saying he wasn't happy with the current state of the UK-US trade relationship.
“The UK is out of line, but I think that one can be worked out”, said Trump in response to a question from the BBC.
Tariffs will “definitely happen” with the EU, said Trump, arguing that Europe was not buying US products.
Business and trade secretary Jonathan Reynolds said that the UK’s goods trade deficit with the US would be a reason why tariffs should not be imposed.
“I think we’ve got an argument to engage with,” Reynolds told the BBC.
A spokesperson for the European Commission said that the EU would “respond firmly to any trading partner that unfairly or arbitrarily imposes tariffs on EU goods".
China has condemned tariffs imposed over the weekend as illegal and said it would file a complaint with the World Trade Organization.
Emergency powers
On Saturday (1 February), the White House confirmed that 25% tariffs will apply to any goods imported from Mexico or Canada, two major allies and trading partners of the US. An additional 10% tariff is set to be imposed on goods from China.
The tariffs were imposed using emergency powers under the International Emergency Economic Powers Act (IEEPA). The rates are allegedly being used to combat the flow of migrants and illegal drugs into the US from its closest neighbours.
“Access to the American market is a privilege,” the White House said in a press statement.
Retaliation
Both Canada and Mexico responded in kind, hitting US goods with 25% tariffs.
Outgoing Canadian PM Justin Trudeau said he was “not backing down”, but it “didn’t have to be this way”.
“We don't want to be here, we didn't ask for this.”
Mark Carney, one of the frontrunners to take over as PM, said Canada would “stand up to a bully”, if he succeeded Trudeau.
Collaboration not subordination
Mexican president Claudia Sheinbaum rejected some of Trump’s allegations – including that the Mexican government was ‘allied’ with drug smugglers – and said she would defend the interests of her country.
“Mexico does not want confrontation. We start from a place of collaboration between the two countries.
“I've instructed my economy minister to implement the plan B we've been working on, which includes tariff and non-tariff measures in defence of Mexico's interests."
“Collaboration, yes. Subordination, no”.
Economists predict that the tariffs could hit a variety of goods, driving up consumer costs and potentially putting various countries into recession.
‘Hurt’
"Someone is going to get kind of hurt here," Wells Fargo Investment Institute's John LaForge told Reuters.
“Well beyond oil, tariffs could stifle the economy, driving up the price of many goods, including fuels for millions of Americans. We continue to monitor the impact but expect fuel prices will rise noticeably if oil and refined products are not exempt,” GasBuddy analyst Patrick De Haan said in a post on Threads.
Stock markets in Asia and Europe both fell after the news broke – with German automakers particularly hit – while there were media reports that Canadian businesses were refusing to buy US-made goods.
