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Government Pledges Support Amid Economic Turmoil from US Tariffs
Keir Starmer has announced that the UK government will provide support to vital British industries as businesses navigate the economic challenges triggered by Donald Trump’s global tariff policies.
As the UK faces the repercussions of a new 10% tariff on exports to the United States, the prime minister signaled intentions to bolster vulnerable sectors. Key components of the industrial strategy will be rolled out ahead of schedule in response to these pressures.
In his first major response to the evolving economic landscape since the tariffs were enacted, Starmer outlined plans to grant car manufacturers greater flexibility regarding their compliance with the target to cease sales of new petrol and diesel vehicles by 2030. Notably, smaller manufacturers like Aston Martin will be exempt from this target, and the sale of hybrid vehicles will be permitted until 2035, allowing the industry more time to transition to electric models, a crucial growth area for the UK.
Additional sectors afflicted by Trump’s tariffs are anticipated to receive governmental backing later this week, with life sciences among those highlighted. To foster growth, ministers are set to unveil initiatives aimed at reducing regulatory burdens and easing planning guidelines.
“Global trade is undergoing a transformation, necessitating that we act more swiftly to reshape our economy through our proposed changes,” Starmer is expected to declare in a speech in the West Midlands on Monday. “Our commitment to supporting British innovation is unwavering, as the time demands a proactive government that acts decisively rather than remaining passive.”
The global stock markets suffered significant losses, totaling nearly $5 trillion (£3.9 trillion), following Trump’s imposition of tariffs last Wednesday. This included a 10% duty on UK imports and a heavier 20% on goods from the EU, which is the UK’s largest trading partner.
In a strategic response to the tariff situation, Jaguar Land Rover has announced a temporary pause on shipments to the US, reflecting on how to address the implications of the newly applicable 25% tariff on imported vehicles.
Over the weekend, Starmer engaged in discussions with various world leaders, including European Commission President Ursula von der Leyen, Germany’s incoming chancellor Friedrich Merz, and French President Emmanuel Macron. He expressed his dissatisfaction regarding the tariffs imposed by the US.
A spokesperson from Number 10 confirmed, “He shared insights on his emphasis to bolster the UK’s economy and its readiness to absorb such shocks, stressing the importance of cultivating trading relationships globally.”
Hope remains that trade negotiations will resume between UK and US officials, potentially leading to reduced tariffs. Nonetheless, senior MPs have advised caution, urging the government not to concede too much ground in these discussions.
Efforts continue to pursue trade deals with other significant economies such as India and China, while British automotive manufacturers including Rolls-Royce, Vauxhall, and Land Rover are being prioritized for stability amid the evolving economic climate. Adjustments to the zero-emission vehicle (ZEV) mandate aim to facilitate the transition to electric vehicle production.
This strategic shift follows Jaguar Land Rover’s decision to pause US shipments, weighing options for mitigating the financial impact of the new tariffs, effective since April 3rd.
Darren Jones, the chief secretary to the Treasury, commented on the urgent need for economic adaptation, saying, “The world has changed.” He noted on BBC’s Sunday programme that while the UK government faces challenges due to the global economic disturbances, proactive steps are being taken to enhance the domestic economy’s resilience.
Despite the challenges, there are discussions about potentially altering key fiscal rules to allow for increased borrowing to stimulate economic growth, particularly if a recession occurs. However, Treasury insiders have dismissed these suggestions as unrealistic.
Jones articulated a commitment to collaborate closely with businesses to fortify the economy: “The changing global dynamics necessitate a more vigorous approach to investing in our economy and supporting our enterprises.” He also referred to the lower 10% tariff rate as a potential “Brexit dividend,” contrasting it with the 20% tariff imposed on the EU.
In light of potential concerns regarding online safety legislation and its implications within trade deals, Jones reassured that fundamental protections for digital safety would remain intact, emphasizing the government’s commitment to safeguarding children from online hazards.
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www.theguardian.com