UK could avoid new trade tariffs after Brexit, hints Trump
THE UK would face a better prospect of avoiding US tariffs on steel and aluminium after leaving the European Union, Donald Trump indicated last night.
Pitching his protectionist move as a defence against “aggressive foreign trade practice”, the president announced a 25 per cent tariff on steel, and 10 per cent on aluminium, to begin in two weeks’ time. He exempted, at least temporarily, Mexico and Canada, and suggested the “great country” of Australia would also be spared, along with “possibly other countries as well” who were “real friends”.
Mr Trump indicated those nations spending more on defence would be better positioned, and White House officials indicated “carve outs” would be decided on a “country by country” basis. The UK is one of only half a dozen Nato countries that meets the requirement of spending 2 per cent of GDP on defence. The others are the US, Poland, Estonia, Greece and Romania. British ministers are understood to have contacted their American counterparts and Whitehall sources are confident British firms could ultimately avoid the tariffs.
However, the announcement is expected to be the beginning of a wider trade war, with additional tariffs likely to follow.
Mr Trump said allies had 15 days to show why they should avoid the tariffs.
He said: “Many of the countries treating us worst on trade and military are our allies. Some are great partners, great military allies. They have 15 days before it goes into effect. We’re going to look at who is treating us fairly, who is paying the bills, who is not paying the bills.”
Mr Trump added: “We have to protect and build our steel and aluminium industries while showing great flexibility and cooperation toward those that are real friends and treat us fairly on both trade and the military.”
He indicated there would be winners and losers from his policy, singling out Germany for scathing criticism. “We have some friends and some enemies where we have been tremendously taken advantage of over the years on trade and on military,” he said.
“If you look at Nato, where Germany pays 1 per cent and we are paying 4.2 per cent of a much bigger GDP, that’s not fair. Nato countries, some owe billions and billions of dollars. Defence is also a part of trade. To a certain extent they go hand in hand.”
The EU conducts trade policy on behalf of the UK, meaning an exemption before it leaves in 2019 would be unlikely. The EU would object to any carve out for one nation before then, and may take legal action to stop it. Such an exemption for the UK could also poison Brexit negotiations.
If the EU becomes embroiled in a trade stand-off with the US, pressure will fall on Theresa May over whether to align with Europe after Brexit or seek a preferential trans-atlantic trade deal.
Last night Boris Johnson, the Foreign Secretary, suggested Britain would welcome a move by Mr Trump to cut a deal on steel tariffs for its closest allies. Brussels has warned it is ready to retaliate with tariffs on US goods.