The British government has intensified efforts to protect businesses and households from the economic disruptions caused by President Trump's decision to raise tariffs and alter global trade norms.
On Sunday, officials announced a suspension of tariffs on 89 products for approximately two years, aimed at helping businesses and consumers save money. The list includes construction materials such as plywood and plastics, as well as everyday household items like pasta and fruit juices.
Additionally, the government plans to increase financing support for exporters by £20 billion ($26 billion) through partial loan guarantees and provide small businesses access to loans of up to £2 million.
As President Trump implements a 10 percent baseline tariff on most imports, including those from Britain, officials have expressed a commitment to alleviating domestic concerns. They emphasize the need for swift actions to support companies amid fragile economic momentum.
Rachel Reeves, the chancellor of the Exchequer, highlighted the urgency of the situation in a column, stating that the government must "rise to meet the moment" in light of global uncertainties.
The recent announcements follow previous government interventions aimed at bolstering protections for firms affected by tariffs. For example, on April 6, the government relaxed rules on electric vehicle sales after a 25 percent tariff was imposed on imported cars. Additionally, regulations were eased to expedite clinical trials in support of the life sciences sector, anticipating further pharmaceutical industry levies.
On Saturday, the government took control of British Steel, the last large plant producing crude steel in the country, from its Chinese owners to safeguard jobs and ensure the operation of blast furnaces.
Ms. Reeves underscored the vulnerability of the British economy to global disruptions, advocating for a robust and responsive government to support key industries affected by tariffs.
In response to President Trump's trade policies, other countries have also begun implementing protective measures. Germany, Italy, Portugal, and Spain announced over €50 billion in financial support for businesses last week to create "tariff shields." Concerns have arisen that weak growth in the region could negatively impact consumer and business spending.
The British economy is notably trade-intensive and susceptible to external shocks. With the European Union, its largest trading partner, experiencing slow growth, the UK is likely to feel the repercussions. Furthermore, rising yields on U.S. Treasury bonds are also impacting British government debt, increasing borrowing costs.
Recent data indicated a 0.5 percent growth in the economy for February, attributed largely to increased manufacturing output. Analysts suggest this uptick may be a response from exporters anticipating tariffs, and caution that such economic strength may not be sustainable.
Despite the recent growth, economists at Pantheon Macroeconomics have reduced their UK growth forecast for this year to 0.7 percent from 1.1 percent, predicting further decline to 0.5 percent growth in 2026, which is half of their earlier forecast.