UK (Parliament Politics Magazine) – Peter Kyle, the UK’s technology secretary, pledged a careful response to Donald Trump’s £24bn VAT tariff threat, while tariffs could impact the British economy.
In response to the newly elected American President Trump’s tariff warning, Mr. Kyle has confirmed that Britain will react appropriately, calling for “cool, clear thinking” to manage the situation effectively.
What did Peter Kyle say about Trump’s tariff threat?
When the technology secretary was questioned on whether the UK should be concerned regarding the President’s recent threat to implement tariffs as retaliation for VAT on US goods, he responded,
“The first thing to reassure people is that we need a government with cool, clear thinking at times like this, and this is what you have with this government.”
Mr Kyle added,
“We will assess any changes and challenges that come down the line from any part of the global economy, and we will act appropriately in the best interest of Britain.”
Referring to the state of the domestic economy, he stated that regardless of the global circumstances, it is essential to develop solid foundations for its operation. Mr. Kyle pointed out that efforts had been made to address the challenges left by the former government.
In response to a question about whether the government would retaliate against Mr. Trump, the tech secretary stated,
“We will carefully assess what’s in the national interest and respond based on the facts.”
How did Pat McFadden respond to the US tariff threat?
The chancellor of the Duchy of Lancaster, Pat McFadden emphasized that the government would avoid overreacting and would take a “wait and see” policy regarding whether the tariffs would “actually come to pass,” adding,
“Sometimes tariffs are announced, a couple of days later, they are unannounced.”
Talking about the scope of the tariffs, Mr. McFadden mentioned that there were still “a lot of unanswered questions” and pointed out that the government decided to refrain from chasing every headline in recent weeks.
What impact will the US president’s reciprocal tariffs have on the UK economy?
Donald Trump, the US president, revealed plans on Thursday to enforce “reciprocal tariffs” on other nations, setting the same levies imposed on American exports, arguing that the policy would be “fair to all.”
Although the exact effect of the announcement on Britain remained unclear, the White House’s approach included VAT as a target for reciprocal tariffs, raising concerns. Financial experts have raised worries that this could result in a £24bn reduction in the UK’s GDP over the next two years.
VAT is specifically highlighted in the policy as an “unfair, discriminatory, and extraterritorial tax,” even though it is imposed on both imported and locally manufactured products.
The policy released earlier this week covers subsidies, strict regulations on US firms, and limitations on animal and plant goods, which may impact UK’s food standards that ban imports of certain US items such as chlorine-washed chicken.
How have economic bodies responded to Donald Trump’s tariff plans?
The National Institute of Economic and Social Research raised concerns that tariffs of this level could reduce economic growth by 0.4% over the next two years, leading to a loss of nearly £24bn.
According to the British Chambers of Commerce, the proposed tariffs would disrupt and overturn long-standing trade practices, resulting in financial strain and uncertainty for global markets.
What did BCC’s trade policy head say about Trump’s tariff plans?
William Bain warned that entering a tariff clash could lead to a retaliatory trade war, highlighting that it could escalate beyond control.
He stated,
“But it must make the most of the time available before the introduction of these tariffs to negotiate with the US on alternative arrangements.”
How much is the UK-US trade worth?
The UK and US engage in trade worth approximately £300bn annually, with Britain importing marginally more goods than it exports, a fact ministers believe could assist in securing tariff exclusions from Mr. Trump’s policy.
The UK mainly exports services to the US, but it remains uncertain if the recently announced tariffs will apply to them. However, the UK also ships over £8 billion in vehicles and more than £6 billion in pharmaceutical goods to the US market.
What is a value-added tax (VAT)?
A value-added tax is a duty imposed on services and goods at multiple points in the supply process. It ensures taxation at each point where value is introduced before reaching the consumer.
The final VAT amount for consumers depends on the product’s price, deducting the cost of materials from earlier production stages.