UK risks fines if Fox cuts a deal on trade tariffs

BRITAIN faces huge fines in an EU legal battle that would poison Brexit negotiations if Liam Fox secures a Uk-only exemption from Donald Trump’s trade tariffs on steel and aluminium imports.

The Trade Secretary, who on Thursday accused the EU of acting like a gang in Brexit talks, said he would use a trip to Washington next week to secure a British carve-out from the US president’s levy of 25pc tariffs on steel and 10pc on aluminium.

Mr Trump had earlier said that “allies” could negotiate their own exemptions from the tax, after revealing that Mexico and Canada would not be hit with the tariffs.

The European Commission is in charge of the common trade policy of all 28 member states, including Britain. Until the UK leaves the bloc, it will have the same rights and obligations as any member nation.

EU sources confirmed that a British breach of trust would be looked on dimly by Michel Barnier, the bloc’s chief Brexit negotiator, and sour the ongoing talks and future trade negotiations.

Mr Fox’s comments that he would look to “maximise the UK’S case for exemption” drew a furious response yesterday from the European Commission, which warned Britain not to break ranks with the rest of the EU in the looming trade war.

A senior official told The Daily Telegraph that if Britain broke EU law, it would have to face the consequences. Commission legal action against EU countries can ultimately lead to the European Court of Justice, which can levy huge, daily fines until the offending nation submits to the ruling.

“The UK has to respect the rules,” the official said. “I don’t think there’s any question that if Mr Fox was going to decide to negotiate on this issue, he would be acting against the rules of the EU.”

“We expect the whole EU to be treated as a trading bloc,” said Jyrki Katainen, Brussels’ vice-president for jobs and investment.

He accused Mr Trump of breaking international trade rules and warned the EU was prepared to hit back with its own tariffs on US products.

Mr Katainen said the EU’S trade commissioner would meet the US trade representative today to discuss the US rules for exemption. Cecilia Malmstrom will also meet Japan’s trade representative.