Britain’s balanced trade with the US should reduce the risk that Donald Trump slaps fresh tariffs on its products, business secretary Jonathan Reynolds has claimed.
The incoming US president has threatened to impose higher tariffs on all imports, leaving its trading partners across the world to consider how they would respond if hit.
Even if Trump did hit the UK with fresh tariffs, the government would think very carefully about retaliating, Reynolds added: “In this country there’s no political constituency for protectionism.”
In an interview for the FT’s Global Boardroom to be broadcast on Friday, the business secretary also played down the prospects of a traditional free trade agreement between the UK and US, admitting that Britain’s food standards rules would remain an obstacle to such an accord.
Reynolds admitted that Britain would be affected by a trade war among western countries but said he hoped the UK would not be directly targeted with additional tariffs by Trump.
The “political philosophy” behind Trump’s call for a global tariff was the president-elect’s concern about US trade deficits in manufactured goods, which “don’t apply to the relationship between the UK and US”, he said.
The US had a trade surplus with the UK, including an $8.2bn goods trade surplus in the January-September period, according to official US figures.
Partly because of difference in accounting for exports from the Channel Islands, the UK also reports a trade surplus with the US. The vast majority of trade is, however, in services.
Conservative leader Kemi Badenoch has suggested Britain should strike a formal trade agreement with the US, but Reynolds cautioned that the two countries had “very different regulatory regimes for agriculture and food”.
Previous attempts to forge a UK-US trade deal foundered on Britain’s refusal to accept imports of American hormone-treated beef or chicken dipped in chlorine.
But the business secretary said he hoped there were many other areas where the two sides could negotiate better trading terms, including working more closely in areas such as professional services and technology.
Reynolds said there were always cases where retaliatory measures would be considered if Britain was targeted with tariffs by a third country. But he warned: “Increasing costs of goods or food for your constituents is not attractive.”
Treasury officials say that chancellor Rachel Reeves also believes tariffs hurt the country that imposes them and will make the case for free trade. “A trade war doesn’t benefit anyone,” one ally of Reeves said.
Lord Kim Darroch, Britain’s US ambassador during the first Trump presidency, said this week that it might be better to respond to any US tariffs by “sucking it up”.
Mel Stride, shadow chancellor, told Westminster journalists on Thursday: “Tariffs will be inflationary, we are a very open economy and if there are tariffs, certainly if there’s anything that tips into what you might call a trade war, then that will be difficult for world growth.”
Meanwhile, Reynolds accepted that many business leaders were angry over Reeves’ Budget and the £25bn increase in employer national insurance contributions, but he insisted they understood why it had happened.
“Business leaders normally come in to correct a difficult situation,” he said. “They do understand that.”
While he said Reeves had not completely ruled out future tax rises in this parliament, he said: “The idea that we can always borrow more money and raise more tax — I honestly think we’re at the limit of that.”
Reynolds said he hoped Britain would secure a “very ambitious” improvement to EU trade relations, adding that the UK should seek to be on good terms with Brussels, Washington and Beijing. “That’s an excellent spot for the UK to be in.”
