The UK government yesterday (13 April) temporarily slashed tariffs on several “everyday items and summer essentials” in a bid to “boost economic growth”.
Although the statement announcing the measures didn’t mention the US by name – amid president Trump’s ongoing tariff war – it did say that the government was acting “swiftly to protect UK businesses and workers in a new era of global trade”.
The suspension of the UK Global Tariff on 89 products, over the next two years, will save UK businesses £17m a year, the government claims. The UK Global Tariff applies to all imported goods where preferential tariffs cannot be applied using one of the UK’s trade agreements.
Making the case for ‘open trade’
Chancellor Rachel Reeves and business and trade secretary Jonathan Reynolds both acknowledged the changing nature of global trade, with Reynolds also arguing that “free and open trade” delivers economic growth and lower prices for consumers.
“From food to furniture, this will reduce the cost of everyday items for businesses, with savings hopefully passed onto consumers,” he said.
Both Reeves and Reynolds said the measures form part of the government’s ‘Plan for Change’. The Telegraph reports that the measures are also part of a wider drive to protect UK businesses from Trump’s tariffs.
Spices, pasta, juices
Several typically imported goods were mentioned in the government’s statement, including pasta, fruit juices, coconut oil, pine nuts, agave syrup and plant bulbs.
Materials used in construction, including plywood and plastic, will also have tariffs suspended.
UKEF support enhanced
The FT reports that the government is also extending the financial support that’s made available to British exporters through its export credit agency, UK Export Finance.
The available support will be increased by £20bn to £80bn, with businesses able to access loans worth up to £2m.
No timeline on US deal
The enhanced support comes in the context of the Trump administration’s ‘reciprocal tariffs’. The US has imposed its ‘baseline’ 10% tariff on UK exports to the US, though higher 25% tariffs are in play for steel and cars.
The UK government has so far taken a “pragmatic” approach to Trump’s trade war, and is hopeful that it could secure some exemptions from tariffs by securing a bilateral trade agreement.
When pressed on this on Sky News over the weekend, Reynolds said he would put “no timeline” on the negotiations for a deal, but did say he was “never going to be satisfied while there are barriers to trade between ourselves and the US”.
“We continue to pursue the best possible deal with the US,” Reeves wrote in the Observer yesterday.
“At the same time, we will continue to pursue future trade agreements with other economies, including India, and secure an ambitious new relationship with the EU that deepens ties with our largest trading partners and delivers for Britain.”
Industry response
Grace Thompson, UK public affairs lead for the Chartered Institute, said the suspension of tariffs on everyday items will hopefully provide some “relief” for affected businesses and consumers, and that business communities are still seeking to fully assess the breadth of impact the tariffs will have.
“It’s positive to see steps like this being taken by the government to provide some shielding for the business community at this time of increased trade weaponisation, having already battled through a range of domestic and external challenges in recent years.
“We are supporting businesses in navigating the impacts of US tariffs and, to that end, we have put out a survey to hear from businesses directly as to how they have been affected and their thoughts on what the UK’s response should look like. We encourage businesses to engage with the survey here.”
Sean McGuire, the Europe and international director at the CBI, agreed that the government should be “commended” for the measures:
“Measures like these will be important for reducing the financial pressures on firms and help to drive growth for businesses of all sizes across the country.”
