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 sending £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 going and services 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 June.
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.