Fears are escalating that companies in the UK may face more severe trade taxes after former US President Donald Trump announced plans to introduce a “mutual tariff” of this value -added tax.
Trump issued instructions to his team to develop a system in which the customs tariffs are to face the fees used on American goods, which may affect trade with the United Kingdom. While Britain was previously considered less exposed to definitions from other countries, the inclusion of value -added tax in customs tariff accounts has raised new concerns about its impact on British exports.
Analysts suggest that the 20 % or more definitions can be applied to the United Kingdom, along with the European Union. British Chambers of Commerce (BCC) has warned that the main industries – including cars, pharmaceutical preparations, and food and drink – could be “big blows” through these new measures, announced by the White House on Thursday.
The last step of the Trump administration is to expand the scope of the United States' trade revenge, and not only the traditional customs tariffs, but “unrefined or harmful or harmful or practices.”
One of Trump's main justifications for the imposition of definitions was commercial imbalances, as the countries sell to the United States more than imported. However, both the United Kingdom and the United States claim to have trade surpluses with each other due to the differences in data collection methods. VAT entry in the customs tariff equation adds more uncertainty about how British companies are affected.
Trump's statement described the value -added tax as “unfair, discriminatory, or outside the regional borders.” The UK VAT system applies a 20 % record tax to most goods and services, regardless of whether it is imported or produced locally.
George Saravilus, the global head of FX research at Deutsche Bank, warned that if American definitions are calculated based on VAT and current definitions combined, British companies issued to the United States may face duties by 21 %.
“If mutual definitions are applied on the basis of value -added tax, European countries will be much higher in the list of affected countries,” said Saravilus.
William Payne, head of the BCC commercial policy, pointed out that although the UK has some “insulation” due to the export of fewer commodities to the United States compared to other countries, the proposed changes will continue to “create more cost and uncertainty” commercial standards . “
Paul Ashworth, the UK's chief economist at Capital Economics, has argued that most experts see VAT as a non -discriminatory tax, as it equally applies to local and imported goods. However, a Trump consultant suggested that VAT is at value -added tax in the United States, as America applies sales taxes much lower at the state level.
Ashurth noted that Trump now seems to prefer the country's tariff approach, rather than imposing a comprehensive tax on all American imports.
The potential impact of these proposed definitions remains uncertain, as legal experts warn that the term “mutual” may not mean what many assume.
“This does not mean that the United States of America will verify what is the UK's tariff for paper imports and is suitable for that percentage of paper exports to the United States from the United Kingdom,” Caroline Ramsay, a partner and head of international trade at the TLT office, said:
Instead, the United States may define definitions based on its own interpretation of what constitutes a fair trade policy.
Payne stressed that it is “vital” that the UK government will participate in negotiations with Trump and avoid “absorbing a trade war of customs tariffs.”
Meanwhile, the UK government minister, who has become warp, warned, saying: “The most rational thing is to do with all these ads is to digest them, know if it has already come, then decides what you do.”
Since uncertainty waving on the future of trade relations between the United Kingdom and the United States, companies, through multiple sectors, are now facing the possibility of increasing costs and potential disturbances of via Atlantic trade.