The CBI has produced an update on the increase in US Tariffs that were announced by their President on Wednesday evening.  It sets out what has been announced, how the UK government is reacting and the possible consequences for UK businesses.  If you have any comments or specific examples of the impact, please let us know.

What has been announced?

  • 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.
  • 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.
  • Effective at midnight (5.01am UK time) on 9 April, additional tariffs will then be levied on the 60 ‘worst offenders’ worldwide – these rates will vary between countries.
  • The EU will now face 20% tariffs, China will face 34% (in addition to previously announced tariffs), and India will now face 26% tariffs.

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. This is the most favourable tariff rate levied on any G7 economy in the world.
  • The previously announced 25% tariff on steel and aluminium is still in effect, which came into force on 12 March.  At the moment, steel and aluminium imports will pay a flat 25% rate and will not be subject to the additional 10% baseline.
  • UK automakers will also face a flat 25% tariff.

How might UK businesses be impacted?

  • Members have already reported they will likely face increased costs, additional uncertainty, and supply chain disruption if tariffs are levied against the UK.
  • There may be additional disruption as businesses now begin to navigate an increasingly complex global picture given the varying tariff rates across the world.
  • 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.  There have been discussions of a potential tariff reimbursement scheme, and we are flagging our concerns about the bureaucracy this would entail and potential impact on Northern Irish firms’ cashflow.
  • 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.

What is the UK Government doing?

  • At Prime Minister’s Questions on Wednesday, the Prime Minister said the UK’s first response to US tariffs should not be to jump into a trade war.
  • The Secretary of State for Business and Trade will be making a statement to the House of Commons on Thursday.
  • 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 government’s hope that this deal will result in the reversal of the newly announced 10% UK tariffs.
  • How is the EU reacting? The President of the European Commission will hold a press conference at 4am BST/5am CET on 3 April, and European trade ministers will hold a summit on Monday 7 April.

What is the CBI doing?

  • Statement: The CBI has issued a press release in response to President Trump’s announcements.
  • Media appearances: The CEO of the CBI appeared on Sky News and Times Radio on Wednesday.
  • International stakeholders: The CBI are liaising directly with BusinessEurope, the B7 (which includes business organisations from the G7 countries – the US, Canada, Japan, France, Germany and Italy) and their sister federations across the globe to understand the impact of the announced tariffs.
  • Government engagement: The CBI is 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.
  • Analysis: Our Economics team will be producing a more thorough analysis in the coming days as more details become clear.  This will be similar to their analysis released in mid-February (contact MTA if you would like a copy of this).

How can you get involved?

  • Please get in touch with Erin Henwood (erin.henwood@cbi.org.uk) to share your thoughts (please copy Geoff Noon at MTA – geoffnoon@mta.org.uk – so we can monitor any input)
  • How will your sector be impacted by these announcements?
  • Do you have any specific insights/case studies you would like anonymously shared with government?
  • What retaliation, if any, would you like to see from UK Government?

A separate notice from the Department for Business & Trade on this topic added that Annex II of the order appears to confirm that Semi-conductors (with a number of metals and minerals) shall not be subject to the ad valorem rates of duty.

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