The UK has been left at a competitive disadvantage to the European Union after the Trump administration imposed new tariffs on dozens of countries over forced labour, but gave Brussels a better deal because it passed a ban the UK has not enacted.
While both the UK and EU face a headline rate of 10%, the EU's is a flat rate, while the UK's will apply alongside other tariffs on goods including footwear and textiles. The government has struck side deals on medicines, steel, aluminium, cars and, with the help of King Charles, whisky. But the British Chambers of Commerce trade expert William Bain pointed to the competitive advantage for EU exporters into the US in some sectors.
“UK faces 10% US tariff plus extra on some goods, while EU gets flat 10% after passing forced labour ban.”
The EU secured better treatment because it passed a ban on forced labour goods, mirroring US legislation. “This is not an accusation on the use of forced labour in supply chains,” the BBC's economics editor Faisal Islam noted. “It is about the passing of specific legislation.” Last October, the UK government said it remained “firmly opposed to the use of state-imposed forced labour” but that it was “considering how best to reflect this position”.
President Donald Trump has turned to accusing dozens of trade partners of trading in goods produced using forced labour as a justification for tariffs, after previous rationales — from the opioid crisis to bringing manufacturing back to America — were overturned by courts or economics. “These are tariffs in search of an authority,” one industry figure said.
In practice, the levies are curiously similar by country to a previous round of tariffs imposed for completely different reasons. The good news for the UK is that the regime effectively remains the same as before. But what has changed is that the EU now has a much better deal — the help given by doing the first trade deal and by post-Brexit trade freedoms looks to have been short-lived.