UK Government Navigates Tariff Turmoil Following US Supreme Court Ruling

High-level discussions with the US administration are currently taking place amid concerns over the prospect of increased tariffs. The UK government is keen to secure the best possible deal for its businesses following the recent ruling by the US Supreme Court that deemed existing reciprocal tariffs illegal. This ruling has thrown Donald Trump's trade deals with about 20 countries, including the UK, into doubt, complicating the existing trade landscape. Following the Supreme Court's decision, Trump announced a new 15% global tariff on all foreign imports under the 1974 Trade Act. This has raised concerns for UK exporters as it could lead to a potential 5% increase in the existing 10% tariff. Education Secretary Bridget Phillipson acknowledged the uncertainty facing UK businesses but remained optimistic, stating in an interview on Sky News that preferential trade arrangements with the US were expected to persist. "The Prime Minister has been actively engaging with the US government and President Trump, and we hope to continue these discussions," Phillipson said. She emphasized the government's commitment to working towards achieving favorable outcomes for British businesses despite the turbulent tariff environment. Meanwhile, German MEP Bernd Lange, chair of the EU parliament's international trade committee, indicated that a planned vote on the US deal would likely be postponed. He described the situation as a chaotic tariff landscape, leaving EU and other trading partners in a state of confusion. William Bain from the British Chambers of Commerce believes the UK should leverage the existing Economic Prosperity Deal (EPD) announced last year to secure better long-term arrangements, focusing on the carve-outs from tariffs rather than the percentage itself. The UK-US deal originally brokered in May included key aspects such as a 10% tariff on cars, lower rates for certain sectors, and retained 0% tariffs for UK pharmaceuticals. However, with the recent upheaval, Bain suggests that government strategy will aim at reinforcing the existing EPD. Experts suggest that under the 1974 Trade Act, Trump's new tariffs can only be imposed for a limited time of 150 days, requiring Congressional approval for any extension after August 23. This introduces a new dynamic, allowing Congress to become a lobbyable entity in the tariff discussion—a factor that wasn't as pronounced in previous dealings with the Trump administration. As the EU's international trade committee prepares to meet on the next steps, it is crucial to understand the implications of these developments on global trade and the potential for legal text negotiations surrounding the EPD. The ramifications of these ongoing discussions could redefine tariffs and trade relationships for countries engaging with the US. Related Sources: • Source 1 • Source 2 • Source 3