UK escapes worst of Trump's tariff wrath with 10% levy but warns of 'threat' to global economy

U.K. Business Secretary Jonathan Reynolds said the country faces a "threat" to its open economy from any global fallout from Trump's new tariffs regime, which included a baseline 10% "reciprocal" tariff on British goods exported to the States.

The U.K. has escaped relatively unscathed compared to many other nations, facing the lowest trade tariff that President Trump announced Wednesday, thanks to its largely balanced trade in goods with the States.

Trade deficits that the U.S. runs with many trading partners were used in large part by the White House to calculate which level of tariff should be imposed on specific countries or territories.

Recognizing the U.K. was in a better position than many countries, Reynolds nonetheless said Britain was vulnerable to turmoil in other parts of the world hit with higher tariffs, such as the EU which will see a 20% levy on its goods exports to the U.S.

"Anything that disrupts the global trading system is a threat to the U.K. because we are a much more globally orientated trading economy than some partners," Jonathan Reynolds told Times Radio on Thursday, according to Reuters

He said the government would continue work to strike a trade deal with the Trump administration and would hope to get tariffs reversed. He didn't rule out counter-measures "if we need to."

The U.K. had hoped to emerge from Trump's tariffs regime relatively unscathed compared to other U.S. trading partners, given the more balanced trading relationship between the two nations when it comes to the import and exports of goods.

One of Trump's longstanding bugbears has been America's trade deficits with its neighbors and competitors including Canada, China, Mexico and the European Union.

The U.K. is already subject to a 25% tariff on steel and aluminum imports that Trump announced in February, along with a 25% duty on "all cars that are not made in the United States." The latter levy came into effect on Wednesday. 

Ahead of the tariffs, Britain had hoped to strike a deal with the White House to avoid new duties but U.K. Prime Minister Keir Starmer tried to temper expectations by saying tariffs were still likely.

Starmer said Britain continued to work on an economic deal with the U.S., however, and that "rapid progress" has been made but cautioned an agreement could take time.

"I don't think anybody wants to see tariffs," Starmer told Sky News on Monday. "We're working hard on an economic deal which we've made rapid progress on, and I hope we can make really speedy resolutions on," he said.

"The likelihood is there will be tariffs. Nobody welcomes that. We're obviously working with the sectors most impacted at pace on that. Nobody wants to see a trade war. But I have to act in the national interest, and that means that all options have to remain on the table," he added.

U.K. Trade Secretary Jonathan Reynolds insisted to the BBC on Tuesday that ongoing talks with the Trump administration meant Britain was in the "best possible position of any country" to have trade duties reversed.