UK Considerations on Potential U.S. Tariffs

(Reuters) – Britain is poised to carefully evaluate its response if U.S. President-elect Donald Trump's administration enacts new tariffs, as stated by the country's business and trade minister, Jonathan Reynolds, in an interview with the FT published on Friday.

Trump has suggested blanket tariffs between 10% and 20% on almost all imports upon his return to the White House in January, with significant tariffs already proposed for Canada, Mexico, and China.

Reynolds noted, "In this country, there’s no political constituency for protectionism.”

He acknowledged that the UK might contemplate retaliatory actions in specific instances but cautioned that raising the cost of goods or food for constituents is unattractive.

Expressing hope, Reynolds indicated that Britain might escape direct targeting by Trump, suggesting that the UK’s balanced trade with the U.S. could mitigate the risk of new tariffs. The minister also downplayed the likelihood of a traditional free trade agreement, citing Britain’s food standards as a potential hurdle.

Additionally, British finance minister Rachel Reeves emphasized last month her intent to make "strong representations" regarding free trade with Trump’s upcoming administration.

Meanwhile, Bank of England policymaker Megan Greene remarked that it remains uncertain whether Trump's proposed higher U.S. tariffs on goods imports would increase or decrease British inflation.