PM urged not to retaliate over tariffs

Business leaders in Lancashire have urged Prime Minister Keir Starmer not to retaliate after US president Donald Trump slapped a 10 per cent tariff on UK goods.

There are also growing calls for the government to provide practical support for SMEs facing ‘difficult decisions’ as a result of the move.

The hike, which was not as high as that imposed on other countries in Trump’s ‘Liberation Day’ announcement, comes on top of a hefty 25 per cent tariff on UK car imports.

The PM has told business chiefs that “clearly, there will be an economic impact” from Donald Trump’s tariffs, but the government would respond with “cool and calm heads”.

Experts fear the 25 per cent tariff burden on UK manufactured motors could cost 25,000 jobs in the British car industry. One in eight cars built in the UK is exported to the US.

North America is a key market for North West motor manufacturers including Bentley and JLR and the sector has a strong supply chain in Lancashire.

Paul Jones, chief executive of Northern Automotive Alliance, based at AMRC North West at Samlesbury Enterprise Zone, said: “Rather than imposing additional tariffs, we should explore ways in which opportunities for both British and American manufacturers can be created as part of a mutually beneficial relationship, benefitting consumers and creating jobs and growth across the Atlantic.

“The industry urges both sides to come together immediately and strike a deal that works for all.”

Miranda Barker, chief executive of East Lancashire Chamber of Commerce, said: “It is a really dire situation. Anything that puts a barrier between us and our largest market is a huge issue.

“We hope the government efforts, to capitalise on small window of opportunity to get an acceptable bilateral free trade deal, are successful.

“Also, we are worried about the UK being swamped with lesser quality goods or materials such as aluminium or steel that were destined for the US markets.”

Babs Murphy, chief executive officer of North and Western Lancashire Chamber of Commerce, added: “The government has demonstrated commendable composure thus far.

“It is crucial that they maintain this approach as negotiations progress. Securing the best possible deal for the UK should remain a priority.

“However, the repercussions of these decisions will be felt widely. There is a heightened risk of trade diversion, which could disrupt business communities globally.

“We anticipate a decline in orders, an increase in prices, and a general weakening of global economic demand. This situation is detrimental for all parties involved.

“Many businesses, particularly small and medium-sized enterprises, will face tough decisions ahead, and we urge the government to provide practical support to assist them.

“We recommend that businesses promptly engage in discussions with their US customers to manage the impact of these tariffs. Depending on existing contracts, there may be opportunities for favourable arrangements.”

The US accounts for 40 per cent of exports for Rossendale based MattressTek , which manufactures automation machinery for the processing of mattresses, beds and components.

Production manager Michael Peel said: “Whilst we’re disappointed, we’re glad the tariffs imposed aren’t as bad as initially thought or expected.

“We are in regular contact with our customers and suppliers who support our export operations to the US and hope to use this to our advantage.

“We’re also in talks with new prospective customers there and hope these will positively progress too.

“We’ve previously been successful in securing proportional funding to support the development, testing and installation of our machines and automation production solutions in customer sites across the US. We would obviously welcome similar initiatives and opportunities through the Department for Business and Trade.”

Nationally, Shevaun Haviland, Director General of the British Chambers of Commerce (BCC) said: “The government has kept a cool head so far and must continue to negotiate.

“This is a marathon not a sprint, and getting the best deal for the UK is what matters most. But no-one will escape the fallout from these decisions, there will be an increased risk of trade diversion, and it will wreak havoc on businesses communities across the world.

“The UK is not without influence, our bilateral trade with the US is worth £300bn, we have £500bn invested there and it has £700bn tied up in our economy. There is a high-level of co-dependency and we are speaking to businesses across the UK on options for government to consider.

“There are no winners in the current scenario, negotiations will take time and will inevitably involve compromise. Any decisions on taxes will need to be taken very carefully, and the government must consider all its fiscal options.

“It should keep everything on the table during talks, but retaliatory tariffs should only be a last resort.

“Many firms, especially SMEs, will now be facing difficult decisions and we urge government to do all it can to provide practical support to them.

“We would advise businesses to immediately start negotiations with their US customers on managing the impact of these tariffs – depending on their contracts, there may be deals to be done.

“Support may also be available from the British Business Bank’s Growth Guarantee scheme which can offer financial support to firms with cashflow issues.”

The impact of President Trump’s tariffs on the aerospace industry, another vital part of the Lancashire economy, remains uncertain.

Airbus has said it could prioritise deliveries to non-US customers if tariffs were to disrupt the company's imports in the country.

And, according to reports, Kevin Craven, chief executive of the trade association ADS, said it was not clear whether an exemption from tariffs on items classified as air worthy by regulators continues.

Ginni Cooper, manufacturing partner at Lancashire based accountancy and business advisory firm MHA, said tariffs added to the uncertainty facing the sector.

She said: “With business confidence in decline and increasing headwinds from across the Atlantic in the form of trade tariffs, it is difficult to see where significant sector growth is going to come from.”

Speaking about the tariffs on the motor industry, she added: “With the US being the largest market for many UK-based OEMs, this will have a significant impact across the whole supply chain, unless a deal can be brokered with the UK government.”

Meanwhile, business and trade secretary Jonathan Reynolds told the Commons he was taking the first step towards retaliatory action against the US “to keep all options on the table”.

He said ministers were still pursuing an economic deal with the US as the priority but “we do reserve the right to take any action we deem necessary if a deal is not secured”.

And he said that officials will consult businesses on possible retaliatory measures over the next four weeks, until May 1, “to enable the UK to have every option open to us in future.”