U.K., Australia Face Higher Costs Under Trump’s New
15% Global Tariffs
Many important U.S. trading partners are
facing higher duties after President Trump, reacting to a Supreme Court setback,
set the rate on a new set of global tariffs at 15 percent.
1.
Triggering Event:
The Supreme Court of the United States struck down President Donald Trump’s earlier
sweeping “reciprocal” tariffs.
2.
Administration’s Response:
o
Imposed new tariffs under Section 122 of the Trade
Act.
o
Initially set at 10%, then raised to 15%, the
maximum allowed under that authority.
o
Valid for 150 days unless extended by Congress.
3.
Mixed Impact Globally:
o
Some countries saw tariffs reduced.
o
Others, including the U.K. and Australia, are
now worse off.
Impact on
the United Kingdom
4.
Earlier Trade Deal:
o
Britain had secured a 10% tariff rate in a May
trade deal during Trump’s second term.
o
Agreement also included lower sectoral tariffs on cars
and aircraft parts.
5.
New Situation:
o
The across-the-board 15% tariff overrides Britain’s
earlier preferential rate.
o
Raises effective duties, weakening the perceived “special
relationship.”
6.
Political Reaction:
o
Education Secretary Bridget Phillipson said discussions
are ongoing.
o
British Chambers of Commerce warned businesses would
be dismayed.
7.
Economic Stakes:
o
U.K. exported about £60 billion ($81 billion) in goods
to the U.S. last year.
o
Services dominate trade, but goods exports are still
significant.
8.
Relative Loss:
According to Global Trade Alert, Britain is the biggest loser among the U.S.’s top
20 import partners under the new structure.
Impact on
Australia
9.
Free Trade Agreement Context:
o
The Australia–United States Free Trade Agreement eliminated
most trade barriers.
o
Australia was earlier subject to a 10% baseline tariff.
10.
Higher Duties Now:
·
The new 15% rate increases tariffs on most Australian
exports.
11.
Government Reaction:
Prime Minister Anthony Albanese called the levies unfair and reaffirmed support
for free and fair trade.
12.
Strategic Dimension:
·
The U.S.–Australia partnership includes cooperation
on critical minerals and rare earths.
·
Trade friction could strain broader security ties.
Other Affected
Countries
13.
Also Worse Off:
·
Japan
·
South Korea
·
Major members of the European Union
14.
Potential Beneficiaries:
Brazil, China and India may comparatively benefit under the revised tariff structure.
Broader Implications
15.
Trade Deals in Doubt:
Agreements negotiated only months ago are now uncertain.
16.
Temporary Nature:
The 15% tariffs are a short-term measure, pending possible alternative legal mechanisms.
17.
Alliance Strain:
For close U.S. allies like the U.K. and Australia, the move introduces uncertainty
into both economic and strategic relationships.
Overall Significance
Trump’s shift to a 15% global tariff following the Supreme
Court ruling has reshuffled trade advantages, leaving key U.S. allies facing higher
duties than under prior negotiated deals and injecting fresh volatility into global
trade relations.
After
the Supreme Court struck down the legal basis for President Trump’s sweeping tariffs
on Friday, many U.S. trading partners saw the tariff rate on their goods lowered
from what they faced before the ruling. But for others, like Britain and Australia,
the math went the other way.
The
legal setback led the Trump administration to announce that it would temporarily
impose new 10 percent tariffs under a different law, Section 122 of the Trade Act.
Over the weekend, the administration raised the rate to 15 percent, the maximum
the law allows.
Like
the earlier “reciprocal” tariffs that were invalidated by the court, the new import
duties upend years of economic cooperation. In some cases, the new tariffs thrust
into doubt trade deals agreed to only months ago.
Britain
became the first country to reach a trade deal during Mr. Trump’s second term, and
both governments emphasized the “special relationship” between the two countries.
As part of the deal, reached in May, Britain secured a 10 percent tariff rate, which
was applied on top of existing levies. Britain also secured some lower sectoral
tariffs, which rely on a U.S. legal authority not subject to the Supreme Court ruling,
on its exports of cars and plane parts, in exchange for accepting higher imports
of American beef and ethanol.
After
Mr. Trump said on Saturday that he would raise an across-the-board tariff to 15
percent, putting Britain in a worse situation, government leaders in London sounded
less certain about their country’s special status. Bridget Phillipson, the education
secretary, said on Sky News on Sunday that Britain had secured a “preferential deal”
and that “we would hope and expect that to continue, but these discussions are ongoing.”
The
higher global tariff rate makes Britain the biggest loser among America’s top 20
import countries, with Japan, South Korea and major European Union members also
worse off, according to Global Trade Alert, a nonprofit policy tracker. Brazil,
China and India stand to benefit the most.
Most
of Britain’s trade with the United States is in services, but last year it exported
about 60 billion pounds ($81 billion) of goods to the United States, from about
40,000 companies.
These
businesses “will be dismayed at this latest turn of events,” William Bain, head
of trade policy at the British Chambers of Commerce, said in a statement. “We had
feared that the president’s Plan B response could be worse for British businesses
and so it is proving.”
For
Australia, a free-trade agreement signed in 2005 eliminated virtually all trade
barriers between it and the United States. Mr. Trump’s initial batch of tariffs
last spring imposed a base-line 10 percent rate on Australia and many other countries.
That means that Australia is also now subject to higher rates than before the court
ruling for most of its exports.
Prime
Minister Anthony Albanese of Australia called the new levies unfair at a news conference
on Monday. “We will of course make appropriate representations,” he said. “We support
free and fair trade.”
A
White House official said the 15 percent tariffs were a temporary measure while
the administration pursues other legal authorities to impose permanent rates closer
to the rates negotiated in trade deals.
Trade
with the United States is a small fraction of Australia’s total trade activity,
but it is strategically important. In October, the two countries signed a deal to
secure the supply of critical minerals and rare earths, materials the United States
needs as it tries to reduce its dependence on China, which has used restrictions
on rare earth exports as a trade cudgel. Australia is the world’s fourth-largest
rare earth producer, according to the Center for Strategic
and International Studies.
Strong
economic ties between Australia and the United States were viewed as important factor
for national security, said Jared Mondschein, director of research at the United
States Studies Centre, an Australian think tank. Rewriting the trade rules, he added,
“doesn’t help the U.S.-Australia alliance.”
Several
aspects of Britain’s trade agreement with the United States have been bogged down
in negotiations, which have been complicated by the Supreme Court ruling. Britain
has been pushing for the United States to enact lower tariffs on its steel exports,
while the Trump administration wants Britain to accept more U.S. agricultural goods
and is frustrated with the country’s digital services taxes and regulations.
“This
is an evolving situation,” Ms. Phillipson said on Sunday. “But of course, we want
to get the best possible deal for British businesses.”