Travel News

BY Melissa Lawford

Britain is facing a bigger hit from Donald Trump’s tariffs than Canada, despite Sir Keir Starmer’s trade deal with the US.

Goods exported from the UK to the US are charged an average tariff rate of 9.3pc, while the average rate charged on goods from Canada is just 9pc, according to data from Capital Economics.

The findings come after the US president singled out Canada as he launched a sweeping tariff blitz last week, imposing a 35pc levy on its North American neighbour.

Meanwhile, Britain has secured a rate of 10pc, the lowest levy in a trade deal secured by any nation. However, experts said the reality was less favourable for the UK.

David Henig, director of the UK Trade Policy Project, said: “10pc suggests we got the best deal, but actually if you dig underneath it, in some areas that is not the case.”

This is because the headline 35pc tariff only applies to Canada’s exports that are not compliant with the pre-existing United States-Mexico-Canada-Agreement (USMCA).

This exempts goods that originate in North America, which make up around 90pc of Canada’s goods exports to the US.

Stephen Brown, deputy chief North America economist at Capital Economics, said: “This increase in the tariff rate is not really a big deal for the Canadian economy, even though the optics look bad.”

Mr Trump last week said Canada had “failed to cooperate” on curbing the trade of fentanyl, and criticised the retaliatory tariffs Canada has imposed on the US.

Canada had been pushed hard for a deal with 11th-hour lobbying in Washington. However, its prime minister, Mark Carney, angered Mr Trump after he said the country would join the UK in recognising a Palestinian state.

Canada’s steel, aluminium and car exports to the US are still subject to Mr Trump’s respective sectoral tariffs of 50pc and 25pc, but there are exemptions for USMCA-compliant car parts.

Under the terms of the UK trade deal, Sir Keir secured a quota of 100,000 cars that would be subject to tariffs of only 10pc, instead of 25pc.

But the UK has so far been unable to secure an exemption from Mr Trump’s sectoral tariffs on steel and aluminium, though the rate for Britain has been fixed at 25pc instead of 50pc.

Trade Secretary, Jonathan Reynolds, said last week he was optimistic that Britain will be able to get this 25pc tariff lifted.

A government spokesman said: “Thanks to our landmark trade deal with the US, the UK is now the only country in the world to have secured a 10pc tariff for car exports, the only country not paying the 50pc global tariff on steel and aluminium, as well as receiving the lowest reciprocal tariff rate of 10pc.

“We will continue to work with the US to get this deal implemented as soon as possible to give industry the security they need, protect vital jobs, and put more money in people’s pockets through the Plan for Change.”

The UK’s effective tariff rate is lower than the headline 10pc rate because some key goods, such as pharmaceuticals, have so far been exempted from tariffs.

Although Canada’s effective tariff rate is lower than the UK’s, Mr Trump’s tariffs are likely to have a bigger impact on Canada because its exports to the US make up a much larger share of its economy.