Trade groups call on UK government to take urgent action in response to Trump tariffs

UK TRADE groups have called for the UK government to take urgent action in response to the tariffs imposed by the US, warning that domestic manufacturing is likely to decline.

US president Donald Trump has put  a 10% tariff on UK exports,  and a 25% tariff on all foreign-made cars, adding to last month’s 25% tariff on US imports of steel, aluminium, and derivative products. Trump said the moves are necessary to correct a structural imbalance in the global trading system that threatens the US economy and national security.

The UK Chemicals Industry Association (CIA) has warned that the increased costs will accelerate the decline of domestic manufacturers already struggling with higher energy costs than overseas competitors.

“On top of paying energy bills which are 400% higher than those in the US and up to 100% more than in Europe, these additional costs will mean companies looking again at their UK future,” said CIA CEO Steve Elliott.

Last year, UK chemical and pharmaceutical exports to the US were worth £5bn (US$6.5bn) and £6bn respectively. Nearly a quarter of all the UK's chemical exports went to the US in 2023, according to figures from the CIA. This includes basic chemicals like ethylene, propane, and butane used to produce plastics, fuels, propellants for pharmaceutical products as well as feedstocks used in inks, soaps, electronics, and construction products.

It says the tariffs will affect US competitiveness too as there are many US companies operating plants in the UK that trade directly with parent plants in the US. It predicts the new costs will reduce investments in research and the construction of new production capacity.

UK government consults business on counter-tariffs

Today, the UK government said it will continue pushing for a trade deal with the US but in the meantime is consulting business on what products the UK could issue retaliatory tariffs on. It has published a 417-page list of products that includes foodstuffs, oils, fuels, metals, fertilisers, chemicals, wood, paper, ceramics, glass, machinery, and process plant equipment.

Describing the US tariffs as “deeply regrettable”, the UK government’s trade secretary Jonathan Reynolds said: “We will seek the views of UK stakeholders over four weeks until 1st May 2025 on products that could potentially be included in any UK tariff response. This exercise will also give businesses the chance to have their say and influence the design of any possible UK response.”

Reacting to the news, Elliott said the UK chemicals industry needs the UK to take urgent action on negotiating a deal.

“Whilst the Government is right to think before pressing the retaliation button and we welcome the commitment to consult on the implications of possible retaliatory measures, talks between our respective administrations must proceed as quickly as possible. Minimising the impact of these additional costs and securing a wider trade agreement that supports UK manufacturing businesses and jobs is an urgent priority,” Elliott said.

Trade group UK Steel hinted that a deal might not be possible, and that the UK government should act now to protect the sector, which has already suffered a series of major closures in recent months.

Gareth Stace, UK Steel director general, said: “The UK government must continue its efforts to strike a deal with the US, but we recognise that this requires willingness from both sides. Domestic trade policy on the other hand is entirely within the government’s gift, and it can immediately take action to strengthen our trade defences.

In 2024, the UK exported 180,000 t of semi-finished and finished steel to the US, worth £70m and equivalent to 7% of all UK steel exports. This has fallen from 300,000 t in 2017 following previous tariffs, quotas, and excess supply in the market.

“We cannot afford to wait any longer as our exports are being damaged, and our market is being undercut by rising imports. UK Steel has warned that the steel crisis has been deepening for some time and bold, decisive and significant interventions are needed now.”

The UK’s Society of Motor Manufacturers and Traders (SMMT) has said the tariff costs cannot be absorbed by manufacturers, meaning costs for US consumers will increase which in turn will stifle demand and could see UK manufacturers produce fewer cars.

A spokesperson for the Food and Drink Federation said: “As the UK’s third biggest market for food and drink, we’re concerned to see an additional 10% tariff imposed on goods to the US. Whether chocolate, haggis, or the iconic tea and biscuits, our members are predominantly exporting heritage British food and drink products that are well loved by American consumers. The majority of these are made by the 12,000 small and medium sized businesses in our sector, who will be disproportionately affected by these tariffs.

“We want to work with government as it develops its trade strategy to minimise the impact on our sector and help us continue to trade with all of our major markets, so that people around the world can continue to enjoy the food and drink that the UK is known for.”