President Trump announced sweeping tariffs on Wednesday 2 April, 'Liberation Day', the ramifications of which will be felt deeply around the world.
The announcements are deeply concerning for businesses, who have already raised concerns about the ongoing uncertainty and disruption. The UK must use this unpredictable period to double down on its commitment to free and fair trade. Doing so will provide businesses with the confidence they need to kickstart growth, foster innovation, and boost productivity.
What has been announced?
On 2 April, President Trump signed an Executive Order declaring a national emergency due to national and economic security concerns arising from US goods trade deficits. He called this America's 'Declaration of Economic Independence'. By declaring a national emergency, he is now able to impose tariffs - a power normally reserved for Congress.
He announced the following new tariffs:
- Effective at midnight (5.01am UK time) 3 April, all foreign made automobiles will be subject to a 25% tariff
- Effective at midnight (5.01am UK time) on 5 April, a flat 10% tariff rate will be applied to all countries. Trump called this a 'kind reciprocal, not full reciprocal' plan
- Additional tariffs will then be levied on the 60 'worst offenders' worldwide - these rates will vary between countries. These were due to come in on 9 April but have been paused for 90 days.
Which announcements relate directly to the UK?
A flat 10% tariff rate will be applied to all UK goods entering the US from midnight (5.01am UK time) on 5 April. At the time of announcement (i.e. before the 90 day pause of additional tariffs was announced) this was the most favourable tariff rate levied on any G7 economy in the world.
The UK remains subject to previously announced 25% tariff on steel and aluminium, which came into force on 12 March. For now, it appears that the new 10% baseline tariff will not be applied in addition to the 25% tariff.
UK automakers will also face a flat 25% tariff.
How might UK businesses be impacted?
The situation remains very fluid, and we are prepared for more developments in the coming days and weeks - these developments will undoubtedly affect the extent to which firms are impacted. CBI members have already reported that they are dealing with increased costs, additional uncertainty, and supply chain disruption - challenges which may be exacerbated given the complexity of varying tariff rates across the world.
We are particularly concerned about Northern Ireland being caught in the crosshairs of an EU-US trade war. Under the Windsor Framework, Northern Ireland has access to both the UK and EU markets. This means that Northern Ireland would be forced to impose any retaliatory tariffs levied by the EU onto US imports.
What is the UK Government doing?
The Prime Minister said the UK's first response to US tariffs should not be to jump into a trade war.
Government continues to advance negotiations for an economic prosperity deal, which is expected to outline closer cooperation and alignment on areas like technology and artificial intelligence. It is hoped that this deal will result in a reversal of the newly announced 10% tariffs on UK goods.
The Prime Minister also outlined plans to back the automotive industry on 7 April, changing the Zero Emission Vehicle Mandate.
What is the CBI doing?
The CBI has issued a number of press statements, including in response to President Trump's announcements,the government's launch of a request for input, and the Prime Minister's announcement regarding the Zero Emission Vehicle Mandate.
Read our Economics team's detailed in-depth analysis of the tariff announcements and what they mean for business and the economy.
The CBI team have also done a number of media appearances, including on Sky News, BBC News, ITV News, Channel 4 News, Times Radio, and Good Morning Scotland.
We are liaising directly with BusinessEurope, the B7 (which includes business organisations from the G7 countries - the US, Canada, Japan, France, Germany and Italy) and our sister federations across the globe to understand the impact of the announced tariffs.
The CBI is also gathering immediate member insights to share with government officials at all levels - from the Business Secretary and the Chancellor to working level officials. This is in addition to the meetings held and detailed insights already shared with government following the Q1 Council, Committee and Working Group round and additional member meetings.
How can my business get involved?
Please contact Erin Henwood to share your thoughts on the announcements, how they might impact your business, and any retaliation you would like to see from the UK Government.
