UK-US Trade and Tariffs

Callum Anderson Excerpts

Thursday 3rd April 2025 Commons Chamber

[Jonathan Reynolds]

I am grateful to the hon. Lady for her questions and her submission. I am pleased to hear that she feels we need to end any potential trade war—although I am pretty certain I heard her in the media last week demanding that we escalate the trade war. I do not think that is in any of our interests, and it is not the route and direction we need to go in.

The hon. Lady mentions that there is no sign of the UK being treated in any different way; she will know that the US has a view of VAT that we do not share—the US compares VAT to its sales tax. If we look at our rate of VAT and the comparable treatment of the European Union, we see that there is a differential. That does not satisfy me, because I believe we could seriously get to a position in which we not only avoid the imposition of additional trade tariffs and barriers, but deepen our trade relationship and remove some of the barriers that already exist, particularly in the trade in services. That is the Government’s objective.

We of course work closely with a whole range of friends and allies, but when they go into any negotiation, they represent their own national or customs union interest, and we do the same. I would not expect any country to go into a negotiation trying to represent the UK; other countries will have their own interests. I do the same for the United Kingdom: I have to put our interests first. There is a different structure to the trading relationship between the US and the UK—for instance, the US does not have with us the large deficit in traded goods that it has with the EU or China—so it is a different level of conversation and it allows us to put our own interests first. That is all that the Government seek to do in our policy towards the US.

The hon. Lady mentions a range of other issues that I recognise. Colleagues know that I had strong views on the very large increases in industrial energy costs that occurred after 2010—there was an increase of almost 50% in real terms—and I think they need to be addressed. The industrial strategy and other Government initiatives set out our wider policy objectives and tools in this area. The consultation and call for input that I announced today is much more about the formal steps we need to take to understand from businesses the impact and give them the chance to put forward their views. As I say, that will not be necessary if we can come to an agreement, which I believe all Members want us to do. I believe that the relationship can be deepened. If we get it right, it will not come at a cost to our other key trading relationships, such as with the European Union. That is the Government’s objective and I welcome any support from throughout the House for fulfilling it.

[Callum Anderson (Buckingham and Bletchley) (Lab)]

I thank my right hon. Friend for his statement. Yesterday’s dramatic shift in US trade policy marks an historic abdication of the principles of open commerce and global trade that have underpinned the economies of the western world since the end of the second world war. Tariffs bring no winners—there are only losers, through higher costs for consumers and higher barriers for business and industry. Will the Secretary of State set out how the Government are working with international institutions such as the World Trade Organisation to prevent further escalation and position the UK as a leading champion for open markets?

[Jonathan Reynolds]

I warmly welcome my hon. Friend’s question. He is right that this is a substantial change in US policy. It is important that, even if we do not agree with some of the decisions made and the thinking that underpins them, we recognise where they come from. Indeed, they were part of the US presidential campaign, so we have been able to prepare the ground for our conversations.

My hon. Friend asked about international co-operation. We are strongly involved with the WTO, and particularly supported the re-election of Dr Ngozi as its director-general. It is important to remember that despite the problems the multilateral system faces, it is still the basis on which the vast majority of trade around the world takes place. We will continue to play a constructive role in relation to the WTO, and any multilateral organisation, where that serves our interests.