The UK would need to “weigh the consequences” of any demands the US makes on trade if they risk damaging relations with the EU, the Business Secretary has warned.
Britain has a larger trading relationship with the bloc than America and would be cautious of provisos that may have an “adverse” effect on ties with Brussels, Jonathan Reynolds suggested.
Mr Reynolds said the Government had made “several contingencies” for the possible outcome of the US election won by Donald Trump, taking into account to what extent “rhetoric” on the campaign would be turned into policy.
Concerns have mounted over a potential hit to the UK economy following President-elect Donald Trump’s repeated promise during his election campaign to levy a 20% tax on all imports.
He has also threatened to bring in tariffs as high as 60% on Chinese-made goods and appointed prominent China hawks to foreign and defence positions.
Appearing before Lords’ International Agreements Committee on Monday, Mr Reynolds was questioned by peers about how prepared the Government feels to deal with the Trump administration.
“The first thing I would say is we should not jump into making statements until we have the administration formed… I don’t think speculating on how we should respond before there’s something to respond to is particularly in the UK’s national interest,” he said.
“I would say we have to think beyond the obvious issues in relation to the UK and the US. To state the obvious, tariffs on UK goods entering the US would be a difficult thing for us to have to contend with.
“But of course, the challenge is much greater than that. I would put that in the first category.
“The second category is what the consequences are for the relationship between the UK and the EU.
“The US is a major and important trading partner for the UK, £300 billion of bilateral trade, but compared to the EU with over £800 billion of bilateral trade, clearly if there are things that we’re offered or asked to do that would result in an adverse relationship on the European side, we’d have to weigh the consequences of that.”
Mr Reynolds said that as a “globally-oriented” trading nation, Britain would be particularly affected by a trade war with Beijing.
“I think perhaps the most important thing to say is that there have been many parts of the US presidential campaign, actually much more on a kind of cross-party basis in the US, that relate to how the western world as a whole should consider its relationship to China,” the Cabinet minister said.
“And I think again, we’ve just got to be clear with the British people that if there were to be a much wider trade confrontation with China and the West, as a much more globally-oriented trading nation the UK is much more exposed to that than, say, the US is.
“So simply being asked to replicate what another country is proposing might be a much more painful proposition for the UK than it might first appear to people not aware of just how trade intensity affects our economy.”
It comes as Prime Minister Sir Keir Starmer on Monday told Chinese President Xi Jinping he wanted “respectful” relations with Beijing as he became the first prime minister to meet the leader since 2018.
