Donald Trump's tariffs are likely to impact the UK economy.
Donald Trump's "liberation day" tariffs could have a huge impact on the UK economy and the world.
The US president is set to announce a slew of tariffs on goods imported to the US on Wednesday evening, and Prime Minister Keir Starmer has said he expects the UK will be hit.
The announcement could include a general 20% levy on UK products in response to the rate of VAT.
The new taxes come on top of previously announced tariffs on cars and steel.
The UK and the US have held intensive negotiations in a bid to secure an economic deal to spare British exporters, but a deal is not expected to get across the line ahead of the president's announcement.
This is a big concern for the UK economy, as the US is the UK's largest export partner.
In 2023, the UK exported £60.4 billion of goods (15.3% of all goods exported) to the United States, according to Office for National Statistics (ONS) figures.
Trump's announcement is expected to slap import taxes on goods arriving from around the world. The imposition of tariffs will make British goods more expensive in the US, which is likely to reduce demand.
ITV News explains how tariffs work and which British exporters could be most affected.
What are tariffs and how do they work?
Tariffs are effectively taxes placed on imports - they can be used to raise revenue for the government or to force people in a country to turn towards local goods by making foreign products more expensive.
Most tariffs are set as a percentage of the value of the goods in question and in general, the importer pays the tariff.
Exporters often have to cut their prices to remain competitive.
Why does Trump love imposing tariffs?
Which UK industries could be affected by Trump's tariffs?
Cars
The car industry has already learned its fate, with a 25% tariff on vehicles sent to the US – something which could cost an estimated 25,000 jobs in the UK.
The US president’s policy, set to be confirmed on Wednesday, could “completely destabilise the UK car manufacturing industry”, the Institute For Public Policy Research (IPPR) said.
Researchers warned that employees at Jaguar Land Rover and Mini are some of the most exposed.
The US was the UK's largest export partner for cars in 2023, ahead of Germany and the Netherlands.
Some 16.9% of UK car exports were to the US last year, representing a total of more than 101,000 units worth £7.6 billion.
The tariffs could force manufacturers to shift production to the US to avoid the charges.
Pharmaceuticals
Britain exported £8.8 billion of pharmaceuticals to the US in 2023, including medicines and vaccines, ONS figures show.
Steve Bates, chief executive of the UK Bioindustry Association, told Channel 4 News the threat of Trump's tariffs was a big concern.
"For the UK Pharma industry, America is 50% of the global market, and in a sense, it's where much of the profit is made in our industry," he said.
"We haven't seen what the proposals are - I think only President Trump knows what he's going to announce."
The Biotechnology Innovation Organisation (BIO) in the US warned tariffs on pharmaceuticals could hinder access to cures and hold back innovation.
According to the findings, nearly 90% of US biotech companies rely on imported components for at least half of their FDA-approved products - making the supply of medicines for US patients and families especially vulnerable to proposed tariffs.
Food and drink
The Scotch whisky industry, which sends almost a billion pounds worth of spirits across the Atlantic, is also bracing for tariffs, after being targeted by Trump during his first term.
In 2019, the Trump administration slapped a 25% tariff on Scotch whisky exports, resulting in £600 million in lost exports, or roughly £1 million per day.
These tariffs are currently suspended, but their potential reinstatement poses a threat to the industry, as the US retains its long-held position as the biggest market for Scotch exports, worth £971 million in 2024.
Chemicals
Chemicals are the second-largest commodity exported from the UK to the US.
The latest available ONS data shows that in 2023, the UK exported £14.2 billion of chemicals to the United States - almost a quarter of the UK's total chemical exports.
Steel and aluminium
Trump's 25% tariffs on steel and aluminium imports, including from British firms, are already in place.
Industry bodies like UK Steel have raised the alarm about the impact this could have on UK consumers, and the economy as a whole.
Trump has billed his 'liberation day' as a bonus for American industry, but these tariffs have the potential to derail the UK government’s hopes for economic growth.
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