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Trump places 10% tariff on Chinese goods

While tariffs will not directly be levied on the UK, the sanctions may have serious knock-on effects for the British economy

US President Donald Trump is expected to sign an order later today imposing hefty new tariffs on the US’ top three trading partners Mexico, Canada and China, potentially disrupting more than $2.1tn (£1.6tn) worth of annual international trade.

Goods exported from Mexico and Canada into the US will be hit with a 25 per cent tariff while products from China will face a 10 per cent levy, the White House announced Friday.

While tariffs will not directly be levied on the UK, the sanctions may have serious knock-on effects for the economy. The US is the UK’s largest individual trading partner, accounting for around 10 per cent of UK goods imports.

Trump has also threatened to follow up with a further wave of tariffs against the European Union, previously warning of a blanked 20 per cent tax on all foreign goods, including from the UK.

What will the proposed tariffs involve?

Trump said on Friday there was little the top three US trading partners could do to forestall the tariffs, citing his frustration with trade deficits with the countries.

His administration is yet to provide details of the tariffs but the President, speaking from the Oval Office after the announcement, said crude oil from Canada, which exports millions of barrels to the US each day, would “probably” face a lower tariff of 10 per cent, with them coming into effect on 18 February.

Crude oil is the top US import from Canada, reaching nearly $100bn ($80bn) in 2023, according to US Census Bureau data.

The President also indicated wider tariffs on oil and natural gas would be coming in mid-February, with his remarks sending oil prices higher.

U.S. President Donald Trump pumps his fist upon his arrival in West Palm Beach, Florida, U.S., January 31, 2025. REUTERS/Kevin Lamarque
President Donald Trump pumps his fist upon his arrival in West Palm Beach, Florida (Photo: Kevin Lamarque/Reuters)

Trump warned more tariffs are coming, saying import taxes were being considered on European goods, as well as on steel, aluminium, copper, medication and semiconductors.

White House spokesperson Karoline Leavitt said the tariffs would be implemented immediately, and details would be published on Saturday.

During his first term, Trump targeted Chinese-imported solar panels and washing machines at between 30 and 50 per cent, before placing a 25 per cent tariff on steel imports and 10 per cent on aluminium for most countries including Canada, Mexico and the EU.

How will Trump’s tariffs on China, Canada and Mexico affect the UK?

Most economists argue that Trump’s tariffs will be detrimental to the US economy in the long term, forcing higher import prices and job losses following retaliatory tariffs. For other countries like the UK, however, who are not yet subject to the trade sanctions there is less clarity.

“It’s very hard to tell what modern supply lines actually are,” David Henig, Director of the UK Trade Policy Project, told The i Paper, in reference to the possible impact of the expected tariffs.

“There may be some UK manufacturers who send things to Canada which are then incorporated into products that go into the US.”

Automakers may face exacerbated costs, for example, due to their vast regional supply chain, where components can cross borders several times before final assembly.

Henig stressed that it was difficult to know until the full details of Trump’s orders are made public.

The trade expert said it was “entirely possible” that Chinese goods would become cheaper for UK consumers if products were routed away from the US and towards Britain.

“That’s the sort of trade diversion that might make it cheaper [to buy Chinese goods] – it’s possible,” Henig said. “Certainly people are keeping an eye out on that.

FILE PHOTO: U.S. President Donald Trump attends a bilateral meeting with China's President Xi Jinping during the G20 leaders summit in Osaka, Japan, June 29, 2019. REUTERS/Kevin Lamarque/File Photo
President Donald Trump meets China’s President Xi Jinping during his first term (Photo: Kevin Lamarque/Reuters)

“Fortunately, that’s a bit more predictable. One can keep an eye out on the market, and the UK can take action if there are signs that products are being dumped on the UK market. That’s actually the slightly more predictable part of all this.”

The UK may also have to contend with retaliatory tariffs from other countries on the US, potentially disrupting more than $2.1tn in annual two-way US trade with its top three trading partners.

Canada has drawn up detailed targets for immediate tariff retaliation, according to reports, while Mexican President Claudia Sheinbaum has also threatened retaliation, but said she would “wait with a cool head” for Trump’s tariff decision.

China has been more circumspect about its retaliation plans, but has vowed to respond to defend its trade interests.

Left-wing think tank the Resolution Foundation last month said Trump’s tariffs on countries like China, and retaliatory levies, “the knock-on effects could be darker still” for the UK.

“No longer part of a large trading bloc, the UK would then face sharp dilemmas in a scramble to retain access to overseas markets and its flow of imports,” the report said.

Resolution Foundation senior economist Emily Fry said: “While Trump tariffs wouldn’t affect the UK economy as a whole as much as Brexit, their effect on firms who sell goods to the US could be stark.”

Will Trump hit the UK with tariffs?

“We don’t know anything,” Henig said, when asked about possible tariffs on the UK. “What we’re watching is just completely random policy-making so I don’t believe there is any way you can predict any of it.

“The issue you’re facing is that if you substitute Canada for the UK – for whatever reason, we do something that upsets [Trump], what can you do?

“Does it make it better if you’re in talks with him? Not really, not necessarily. Does it make it better if you already have a deal with him? No, not necessarily: Canada and Mexico do.”

Henig said the situation with Trump’s administration was “more about human psychology than tariffs”.

What have ministers said?

Trade Secretary Jonathan Reynolds has warned that a “tariff war” between the US and other countries could lead to higher inflation and unemployment in the UK.

He said the UK was particularly vulnerable to the impact of US tariffs on other countries because it is a “very globally oriented economy” reliant on international trade and investment.

Asked if he was worried about the prospect of a tariff war, Reynolds told Sky News last month: “I am, because the UK is a very globally oriented economy so the exposure, the danger to the UK is actually greater than even some comparable countries.”

He also suggested that Trump was primarily motivated to impose the tariffs due to the US trade deficits with China and the EU, and that the UK was “in a different position”.

The Trade Secretary stressed the Labour Government had made extensive preparations for tariffs and had been “engaging early with the new administration” in the US.

The Department for Business and Trade was approached for comment.



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