Donald Trump's latest round of tariffs has left the UK at a competitive disadvantage to the European Union despite both sides facing the same headline 10% rate, experts have warned. The new levies, announced on Thursday and justified by the Trump administration on grounds of forced labour, cut the EU's previous near-blanket 15% tariff to 10% — matching the UK's rate but on simpler terms that exclude additional duties on goods such as clothing, chemicals, beverages and gifts.
The EU's flat rate, along with fresh exemptions for cork and diamonds, means its exporters will face lower effective tariffs than British rivals in sectors not covered by the Turnberry deal struck last year by Keir Starmer and Peter Mandelson. William Bain, trade policy director at the British Chambers of Commerce, said the change had wiped out the UK's comparative advantage in areas like clothing. A British knitted jumper, for example, which previously attracted a 12.5% duty, will now face an additional tariff under the UK's deal, whereas its EU counterpart pays only the flat 10%.
“EU now enjoys better tariff terms than UK despite same 10% headline rate, disadvantaging British exporters”
“The EU has secured better treatment because it has passed a ban on forced labour goods, which the UK has not,” the BBC’s economics editor Faisal Islam noted. The UK government said last October it “remained firmly opposed to the use of state-imposed forced labour” and was considering how to reflect that position — but has yet to pass matching legislation.
There was one bright spot for Britain: a deal cutting US tariffs on Scotch whisky to zero was announced on Friday, giving the UK an advantage over Irish and French rivals still facing 10%. The first shipment of tariff-free whisky is expected to leave the UK within 48 hours. The Scotland secretary, Douglas Alexander, called it “a very welcome day” for the sector, while the business secretary, Jonathan Reynolds, said the shipment “demonstrates why trade deals with our largest economic partners matter”.
The overall trade-weighted effective tariff rate for the EU is now 8.5%, compared with 6.8% for the UK — ostensibly lower for Britain. But Bain warned that the structure of the deal leaves UK exporters facing “a competitive disadvantage for EU exporters into the US in some sectors”. The government must now decide whether to follow the EU’s lead on forced labour legislation, a move widely seen as a backdoor way to target China, or accept that the post-Brexit trade freedoms that helped secure the Turnberry deal have only short-lived benefits.