finance

UK must offer Trump concessions on China to avoid tariffs says senior MP


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The UK should strike a bargain with the US on economic security to avoid “catastrophic” tariffs when Donald Trump returns to the White House, the Labour chair of the House of Commons business and trade committee has urged.

Liam Byrne said the British government should seek an exemption from any US tariffs by offering to tighten up its inward investment screening programme and introduce a tougher export control regime.

The former cabinet minister told the Financial Times the 10-20 per cent universal tariff on US imports threatened by Trump would be a “catastrophic . . . doomsday scenario” for the UK economy and argued action to avoid them should therefore be a priority.

The National Institute of Economic and Social Research has warned the protectionist measures proposed by Trump could halve UK growth and trigger higher inflation and interest rates.

Other economists have said the UK may be less vulnerable to “Trumponomics” than nations that run a trade surplus with the US, however. They point out that the EU is a bigger export destination for British goods and services than America.

Byrne argues that the government can limit the economic damage to the UK by offering Trump concessions that address his concerns about the security threat posed by China.

“If there is one thing that President Trump cares about more than tariffs, it’s China,” he said. The wider Washington establishment had “anxieties and ambitions for partnership with the UK” regarding economic security.

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While the last Tory administration introduced legislation allowing ministers to review and block inward investment to the UK on security grounds, Byrne said Joe Biden’s administration had signalled it wanted the British government to go further.

“We could tighten our investment security and bring it closer to where the US is,” he said, adding that the “big hole” in the UK’s economic defences that was most concerning the US was around export security.

Byrne claimed Chinese involvement in British university research and development partnerships has triggered alarm in Washington that Beijing could gain access to UK-derived intellectual property with potential military applications.

“The US security establishment doesn’t think that the UK has robust enough control around export security in place . . . It’s a concern across Democrats and Republicans,” he said.

He said Britain must take action to reassure American allies and ensure the future of information-sharing under the trilateral Aukus deal, in which the UK, US and Australia are collaborating on naval nuclear propulsion, hypersonics and AI technologies.

A government spokesperson said: “We look forward to working closely with President-elect Trump to improve UK-US trading relations to support businesses on both sides of the Atlantic.”

Trade experts questioned whether any negotiation with Trump could be confined only to issues concerning security and China, warning that the UK is likely to have to wrestle with demands in other sensitive areas, such as agriculture.

Duncan Edwards, the chief executive of transatlantic trade association BritishAmerican Business, said he believed the incoming Trump administration was serious about imposing blanket tariffs as a precursor to a negotiation over exemptions for some countries and companies.

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“Those who think that building a tariff wall is just a negotiating tactic, may end up being surprised. The UK is not the prime target, but it does risk being swept along unless it can make itself exempt. My own view is there is an opportunity to do that,” he added.

Former UK trade department official Allie Renison, now at consultancy SEC Newgate, said a mini-deal with Trump was possible, but the UK would need to make substantive commitments, not just words of intent on China.

“He may want something more tangible that could be spun as a deal which benefits the US economy, including on agriculture,” she added.



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