The Trump administration has imposed new tariffs of at least 10% on imports from 60 countries, including the UK, over claims of forced labour – but the UK has ended up with a worse deal than the European Union, despite appearing to face the same headline rate.
The tariffs are the latest in a series of justifications from President Donald Trump, who has previously cited the opioid crisis, illegal migration and the need to bring manufacturing back to America’s shores. This time, the administration has accused dozens of trade partners of trading in goods produced using forced labour – a move one industry figure described as “tariffs in search of an authority”. The forced labour line shores up the tariffs against a challenge from Congress or the courts, and in practice the levies are curiously similar by country to a previous round imposed for completely different reasons.
“US slaps tariffs on 60 countries; UK's effective rate worse than EU's due to missing forced labour ban.”
While both the UK and the EU appear to have a 10% rate, the EU’s is a flat rate, while the UK’s will apply alongside other tariffs on goods including footwear and textiles. The UK has struck side deals on medicines, steel, aluminium, cars and, with the help of King Charles, whisky. Yet the overall trade-weighted effective tariff rate for the EU could end up at 8.5%, slightly lower than the UK’s 6.8%.
William Bain, a trade expert at the British Chambers of Commerce, pointed to the competitive advantage this gives EU exporters into the US in some sectors. The EU secured better treatment because it has passed a ban on forced labour goods – mirroring the US ban on products that have used forced labour in supply chains – whereas the UK has not. Bain’s observation highlights that the help given by doing the first post-Brexit trade deal appears short-lived.
Last October, the UK government said it “remained firmly opposed to the use of state-imposed forced labour” and was “considering how best to reflect this position”. The failure to pass specific legislation – widely seen as a backdoor way to target China, particularly over conditions in Xinjiang – now leaves the UK at a competitive disadvantage. The question is whether the government will now pursue an EU-style ban to secure a better deal.