LONDON — US President Donald Trump is considering launching what
would amount to an international trade war by imposing
significant tariffs on major exporters of steel and other goods,
reports suggested on Friday.
News site Axios reports that Trump essentially intends to
penalise China for what he sees as the country deliberately
flooding the market with cheap goods, thus making American
products uncompetitive. However, Axios suggests Trump favours
blanket tariffs on imports, regardless of where they come from.
Any imposition of tariffs would inevitably
impact other major allies of the US including Canada, Germany,
Japan, Mexico, and the UK.
Things could be particularly bad here in the UK because the USA
is our biggest export partner on a nation-by-nation basis
(technically the EU is bigger). Britain sends £96.4 billion worth
of goods and services to the US every year, and the country is
also the UK’s second biggest import partner, with close to £60
billion worth of goods and services going the other way each year
Trump’s reported tariff would be 20%, which on the basis of a
very simple calculation could cost the UK close to £19 billion
annually. That said, it is highly unlikely that a 20% tariff
would be levied on every single type of export, and the
mathematics of trade is much more complicated than a simple
one-off fee. But the figure gives a sense of just how detrimental
a trade war could be for the UK.
Steel could suffer
Steel is the top of Trump’s tariff agenda, Axois reports, and
Britain’s already struggling steel industry could be one of the
worst impacted by any “friendly fire” from the policy.
The plight of the Port Talbot plant in Wales was headline news
last year when Indian owner Tata announced plans to sell the
plant citing “imports of Chinese steel, high energy costs and
weak demand,” as reasons why it was unsustainable. The plant was
eventually rescued, but problems remain.
Trump’s planned tariffs could reopen barely healed wounds for
British steel. Britain exports roughly 7% of its steel production
— worth around £330 million per year — to the United States,
according to a recent article in the Daily Telegraph. £66
million of value could be lost if Trump were to enforce the 20%
he reportedly plans.
“The UK sector is entirely supportive of measures taken to tackle
dumping of steel products and unscrupulous trading practices but
this move has the potential to go much further than necessary,”
UK Steel’s director Gareth Stace told the Telegraph earlier in
Even if Trump chose to selectively levy a tariff, targeting only
China, Britain could still be affected. In theory, Chinese firms
could seek to sell more of their goods to other markets,
including the UK. Chinese steel is far cheaper than British, so
fears about the UK industry losing out would likely resurface.