Is Protectionism Back? UK Government Responds to US Tariffs Amid Growing Concerns

The UK government’s response to recent US tariffs has stirred significant discussion, particularly following Foreign Secretary David Lammy’s remarks regarding a return to protectionism. On the heels of President Donald Trump’s announcement, which imposes a 10% levy on nearly all UK exports to the US effective from Saturday, Lammy expressed that the British public would be ‘very concerned’ about the economic ramifications of these tariffs.

Downing Street quickly dismissed Lammy’s comments, emphasizing that they are focused on ongoing negotiations with the US rather than characterizing this period as a new era in global trade. The Prime Minister’s office has acknowledged the shifting economic landscape without labeling the situation as protectionist. The rise in tariffs has caused global stock markets to decline, reflecting widespread anxiety about potential trade wars and economic impacts.

During a press conference while meeting Nato counterparts in Brussels, Lammy lamented the revival of protectionist policies not seen for nearly a century, stressing the need for continued negotiations to safeguard the national interests of the UK. He articulated concerns over how the tariffs might affect the economic welfare of British citizens.

The principles of protectionism revolve around supporting domestic industries through measures like tariffs, aiming to reduce foreign competition; however, such actions may ultimately escalate consumer prices, with domestic firms passing on increased costs.

Prime Minister Sir Keir Starmer has acknowledged the economic impact of the tariffs, while also indicating a proactive diplomatic stance, planning discussions with international leaders to address the situation. Currently, the UK is compiling a list of potential retaliatory tariffs against US products if a satisfactory trade deal cannot be achieved.

Despite Downing Street’s assurances that negotiations are a priority, critics of the US tariffs, including French President Emmanuel Macron, have labeled the measures as brutal and unfounded. The UK government must navigate these turbulent waters carefully to protect its economic growth—forecasts suggest that continued escalation could diminish UK economic growth by 1%, significantly impacting public finance dynamics including potential tax increases or cuts to public spending.

Amidst this geopolitical backdrop, the UK exported nearly £60bn in goods to the US last year, primarily machinery, vehicles, and pharmaceuticals, highlighting the intertwined nature of these economies.