The UK should “notch up” its threats of retaliation towards Donald Trump after he imposed 10 per cent tariffs on UK exports, a former ambassador to the US has said.
It comes as the government scrambles to boost support for British businesses and negotiate a trade deal with the US that would give Britain a carve-out to avoid the sweeping tariffs, which have been slapped on all major economies.
While the UK has said nothing is off the table when it comes to responding to the tariffs, Sir Nigel Sheinwald said the UK should have gone further, earlier with its threats.
“I think it’s right that we should say we’re going to think about retaliation. We might indeed have said that a little bit earlier on”, Sir Nigel told Sky News.
“I think it’s always wrong to take that off the table or sound as if you don’t mean it, because in the world of trade policy and trade negotiators, this is a tough world where you’ve got to brandish those weapons and seem as though you’re prepared to use them.”
“I think the tempo and the tone need to be notched up somewhat”, he added.
Another former ambassador urged the PM to build a ‘coalition of the willing’ against Trump’s tariffs.
Lord Ricketts told the Independent: “With the level of turbulence and unpredictability off the scale, two priorities stand out. First, move further and faster to draw closer to the EU. Second, just as with the coalition of the willing with Europeans on defence, we need a coalition of like-minded democracies to keep alive a rules-based economic order.”
But transport secretary Heidi Alexander warned that retaliatory tariffs put in place by China are “bad news” when asked if the world was heading towards a global recession.
Stock markets plunged on Monday morning in Europe and Asia, as investors braced for further sharp falls on Wall Street after Mr Trump said he will not back down on his sweeping import taxes unless countries even out their trade with the US.
“The imposition of global tariffs and the reciprocal tariffs that some countries have and retaliatory tariffs that some countries have decided to apply, are bad news for the global economy, because it’s bad for global demand, it’s bad for prices and it’s bad for consumers”, Ms Alexander told Sky News.
“That is why we have to do everything that we can to protect the interests of the British people and British businesses, and that is why we are setting out a package of support today for the car industry to provide certainty to British manufacturers and to ensure that they can remain at the cutting edge of the transition to electric vehicles, and also make sure that consumers can benefit from the cheaper running costs of electric vehicles as well.
“And so that’s why the prime minister has been clear that we need to do absolutely everything we can as a government to shelter British businesses from these global economic headwinds.”
It comes as the prime minister gears up to announce a raft of new reforms to boost manufacturers in the wake of Mr Trump’s tariffs.
The prime minister will give a speech on Monday where he will say he wants British manufacturers to be at the forefront of the “electric vehicle revolution”, warning that the “new era of global instability” will push the government to go “further and faster” to support businesses.
Under new measures to be announced on Monday, rules around fines for manufacturers who do not sell enough electric cars will be relaxed, and supercar firms will be exempt.
Companies are grappling with the new rules from the White House, which mean a 25 per cent tariff is now applied to foreign cars imported into the US, while other products face a 10 per cent levy.
Jaguar Land Rover said over the weekend that they would pause shipments to the US, as they look to “address the new trading terms”.
As part of his announcement in the West Midlands, Sir Keir will reinstate the 2030 ban on the sale of new petrol and diesel cars, but regulations around manufacturing targets on electric cars and vans will also be altered to help firms in the transition. Meanwhile, new hybrids will be on the market for another five years.
Luxury supercar firms such as Aston Martin and McLaren will still be allowed to keep producing petrol cars beyond 2030, because they only manufacture a small number of vehicles per year.
Officials are also going to make it easier for manufacturers who do not comply with government-mandated sales targets to avoid fines, and the levies will be reduced.
But transport minister Lilian Greenwood admitted that the rule changes are not a “panacea” when asked if they would mitigate the full impact of Donald Trump’s tariffs.
She told Times Radio: “Look, these changes are not a panacea, but what we are doing is backing British business, backing our world-leading carmakers to make sure that we are as a government helping them to meet the challenges of the future.
“We know that moving to electric vehicles is the challenge of the 21st century in transport, and we want Britain to be right at the forefront. This is how we’re going to create the good jobs and opportunities for the future that get the British economy going.”
The Department for Business and Trade has been contacted for comment.
