Concerns are mounting that UK businesses could face steeper trade taxes after former US president Donald Trump announced plans to introduce “reciprocal tariffs” that factor in VAT.
Trump has instructed his team to develop a system where tariffs on imports match levies imposed on US goods, potentially affecting trade with the UK. While Britain was previously considered less exposed to tariffs than other nations, the inclusion of VAT in tariff calculations has raised fresh concerns about its impact on British exports.
Analysts suggest that tariffs of 20% or more could be applied to the UK, alongside the European Union. The British Chambers of Commerce (BCC) has warned that key industries—including automotive, pharmaceuticals, and food and drink—could be “significantly hit” by these new measures, announced by the White House on Thursday.
The Trump administration’s latest move broadens the scope of US trade retaliation, targeting not just traditional tariffs but also “unfair or harmful acts, policies, or practices.”
One of Trump’s primary justifications for imposing tariffs has been trade imbalances, where countries sell more to the US than they import. However, both the UK and US claim to have trade surpluses with each other due to differences in data collection methods. The introduction of VAT into the tariff equation adds further uncertainty over how British businesses might be affected.
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