Britain must slash red tape, move beyond Brexit and work more closely with the European Union amid Donald Trump’s “completely absurd” trade war, an expert has said. The US President promises to shake the foundations of global trade on Wednesday (April 2) by imposing sweeping new tariffs on almost all of the United States’ major trading partners.
Chris Southworth, Secretary General of the International Chamber of Commerce United Kingdom, told the Daily Express that company boards around the world will now view the US as an “unreliable risk”, pausing investment and looking elsewhere for “less volatile” markets.
Describing US tariffs as “completely absurd”, he added: “I can’t see how the US comes out of this without huge damage to its reputation and economy. But the US represents only 13% of global trade. It doesn’t have the market power it once had. We need to focus on the 87% of the rest of the world.”
Mr Southworth said the UK now needs to “move on” and get out of the “Brexit mindset” as the world has moved on since Britons voted to leave the European Union in 2016. He said: “We need to work more with Europe. It is our biggest, nearest trading bloc and it is more stable [than the US]. Shifting mindsets on Brexit is a big issue.”
The expert pointed to recent talks between historic adversaries China, Japan and South Korea as evidence of that changing world and efforts to “derisk” amid an “unpredictable” US. The three Asian economic superpowers announced a deal aimed at strengthening free trade ties in response to Mr Trump’s tariffs on Sunday (March 30). Canada and the EU have also been discussing closer trade ties as they are buffered by Washington’s tariffs.
On top of closer trade links with Europe, Mr Southworth said the Labour Government needs to slash red tape to reduce costs for British exporters. He said: “[Britain’s] trade economy is screaming out for reform.” He urged the Government to modernise regulations around financing trade and to force banks to release £22billion worth of capital which should then flow to SMEs.
He said: “This is going to go on for four years. Trump is just getting started. [The UK approach to the economy] is like running a home on a thin margin. One small upset and we’re under pressure. That’s going on at a national level. Trade is ripe for modernisation. But the Government needs to be more ambitious in driving innovation so companies can weather the storm coming from the US.”
Ben Farrell is CEO of the Chartered Institute of Procurement and Supply, which has members in 170 countries. He suggested Mr Trump’s tariffs have upended the global trading order, with companies and countries now desperately looking for alternative markets for their products.
He told the Express it would be “normal” to look to other markets amid the “uncertainty”, as companies now look for countries to sell goods which would have entered the US market in order to clear their inventories. On the UK forging closer trade ties with Europe, he said: “That is the natural way people will think. It’s sensible to consider the options, not to say though that the UK will suddenly head back to the EU.”
Experts warn that the shock to Britain’s economy caused by US tariffs would hit the UK’s car, food and drink industries, and wipe out the £9billion of headroom factored into Chancellor Rachel Reeves’ fiscal plans. The US is Britain’s single biggest export market, while the EU is the largest single market bloc the country sends its goods to. The possibility of broad 20% tariffs have been floated by some White House aides, prompting warnings of increased prices, job losses and economic contraction.
UK ministers are said to remain hopeful of securing a deal with the US which would provide some protection from the import taxes, but Prime Minister Sir Keir Starmer has acknowledged “the likelihood is there will be tariffs” on UK exports. The Government had pinned hopes on striking an economic deal with the US to avoid tariffs, with Education Secretary Bridget Phillipson saying on Wednesday she wouldn’t “speculate on eventualities” when asked what Britain’s “plan B” is if negotiations fail.
Mr Southworth said another attempt at a wider free trade agreement between the US and UK would be unlikely to get results, with British consumers wary of chlorinated chicken and hormone injected beef appearing on supermarket shelves. Instead, he urged the Government to pursue an agreement on digital trade, on which he said the two countries are much more closely aligned. He cautioned: “A digital agreement still won’t be enough. We need to build more resilience into our economy.”
He added: “[US tariffs] definitely threaten our national economy, coming at a time when we desperately need growth. This is not helping us at all.”
Mr Farrell warned the uncertainty generated by US trade tariffs threatens to undermine consumer confidence, hitting the High Street and cost-of-living. He said: “There is a risk this stimulates not just a trade war, but actually affects people’s pockets and spending on the High Street.”
The Department for Business and Trade has been approached for comment.