(Alliance News) - The UK is not planning "at the moment" to introduce retaliatory tariffs on the US, Chancellor Rachel Reeves has said after Donald Trump imposed a new trade tax on car imports.
A 25% tariff on vehicles imported to the US will come into effect on April 2, the US president announced on Wednesday.
Shares in Gaydon, Warwickshire-based carmaker Aston Martin Lagonda Global Holdings PLC dropped 4.8% to 70.08 pence each on Thursday morning in London.
Reeves told Sky News: "We're not at the moment at a position where we want to do anything to escalate these trade wars.
"Trade wars are no good for anyone. It will end up with higher prices for consumers, pushing up inflation after we've worked so hard to get a grip of inflation, and at the same time will make it harder for British companies to export."
She went on: "We are looking to secure a better trading relationship with the US. I recognise that the week ahead is important. There are further talks going on today, so let's see where we get to in the next few days."
In an interview with Times Radio, the chancellor said free trade is "good for both of our countries".
She added: "A million British people work for American firms. A million Americans work for British firms. Our two economies are so closely intertwined."
Shadow chancellor Mel Stride said it is "very important" the UK has a trade deal with the US "that means we are protected from those tariffs".
He told ITV's Good Morning Britain: "I think it's a balance between we want to make sure that we have the right relationship with America on all sorts of levels, including security as well as economic, in order to make sure we get the very best for our country."
The Liberal Democrats called on the government to "toughen up" and start placing retaliatory tariffs on US carmakers like Tesla Inc.
The party's deputy leader Daisy Cooper told BBC Radio 4's Today programme: "I think there's only one language that Donald Trump understands, and that is the language of strength.
"What we Liberal Democrats are very concerned about is that the government strategy so far seems to be to cower in the corner and just ask Donald Trump to be nice to us, and just to hope that he doesn't do anything nasty.
"That is not a strategy. So, we think the government needs to toughen up.
"We think the government needs to start preparing for retaliatory tariffs, and that those tariffs, that preparation, should start by looking at putting tariffs on Tesla cars, because clearly Elon Musk is a huge backer of Donald Trump, and that's where we would start."
Around four out of five cars made in the UK are exported.
Figures from industry body the Society of Motor Manufacturers & Traders, SMMT, show the US is the second largest export market after the EU for cars built in the UK.
Some 16.9% of UK car exports were to the US last year.
The BBC reported that the US is the largest sales market for Coventry, England-based Jaguar Land Rover.
Last year the company sold 116,294 vehicles to the US, which exceeded its sales in the UK and China.
SMMT Chief Executive Mike Hawes said the announcement of tariffs was "not surprising but, nevertheless, disappointing" and urged both governments to strike a deal that avoids further damage.
"If, as seems likely, additional tariffs are to apply to UK-made cars, it's a blow to a long-standing and productive relationship," he said.
The tariffs announced by the Trump administration could also create issues for US car firms.
Many source their components from across the globe – meaning they could be faced with higher prices.
Shares in General Motors Co were 6.6% lower in pre-market trading at USD47.60 each on Thursday in New York. Shares in Jeep and Chrysler owner Stellantis NV were 5.2% lower at EUR10.80 each on Thursday morning in Milan.
Ford Motor Co shares were down 3.7% in pre-market trading at USD9.92 each in New York.
By Neil Lancefield, PA Transport Correspondent
Press Association: Finance
source: PA
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