The United States’ latest round of tariffs has resulted in new challenges for British exporters, with some UK sectors facing a disadvantage compared to their European Union counterparts despite no overall change in headline tariff rates. The tariffs, announced on Thursday by the US trade representative Jamieson Greer and targeting countries accused of engaging in forced labor, reduce the EU’s previous near-blanket tariff from 15% to 10%, aligning it with the tariff level in the agreement reached between the UK and the US last year.

The UK government confirmed that there was no change to the headline 10% tariff or the sector-specific preferential rates agreed in the UK-US Economic Prosperity Deal (EPD), which covers key industries such as automotive, pharmaceuticals, and aerospace. The new US measures replace the EU’s tariff regime established under the Turnberry agreement, which had effectively capped tariffs at 15%. Under the updated scheme, the EU benefits not only from a reduced general tariff but also from the restoration of additional exemptions on products including cork, diamonds, aircraft parts, generic medicines, and active pharmaceutical ingredients.

Industry experts have pointed out that this gives the EU an edge over the UK in sectors not covered by the UK’s deal, such as bicycles, clothing, chemicals, beverages, and gifts. William Bain, trade policy director for the British Chambers of Commerce, highlighted that although the headline UK tariff remains unchanged, certain categories like clothing have lost their relative advantage. For example, a British knitted jumper, which faced a base tariff of 12.5%, would now incur an additional 10% under the EPD regulations, resulting in a total tariff burden of 22.5%. In contrast, an equivalent EU-made jumper can enter the US market with a single 10% tariff.

Despite these concerns, the UK government announced a significant development benefitting the Scottish whisky industry. A new agreement eliminating US tariffs on Scottish whisky was unveiled, providing the UK an advantage over Irish and French spirits, both subject to a 10% US duty. The government indicated that the first shipment of tariff-free Scotch would depart within 48 hours, marking a boost for one of Britain’s most valuable export sectors. Scotland’s secretary Douglas Alexander described the announcement as “a very welcome day” for the spirits industry, noting that shipments from Aberdeenshire would be among the first to benefit.

Government officials reaffirmed the benefits of existing trade agreements, with business secretary Jonathan Reynolds emphasizing the importance of relationships with key economic partners. A government spokesperson also stressed that the US recognized the UK’s efforts to combat forced labor in supply chains, which has influenced the tariff decisions.

In contrast, the GMB trade union criticized the tariffs as detrimental to UK businesses and questioned their effectiveness in addressing forced labor practices. Charlotte Brumpton-Childs, the GMB national secretary, lamented that the EU now enjoys better trading terms with the US than the UK does, undermining the “special relationship” between the two countries.

An EU representative acknowledged their disagreement with the forced labor investigation that prompted the tariff adjustments and said they had communicated their concerns to US officials. Meanwhile, the US is reportedly considering additional tariffs under Section 301 of the 1974 Trade Act, potentially targeting European pharmaceutical exports following the EU’s recent €890 million fine against Google. There are also reports of possible 100% tariffs on drugs, which would impact countries including Ireland, Germany, and Belgium.