Scots firms brace for impact of US tariffs as Downing Street expects UK to be hit

Scottish firms are braced for the impact of Donald Trump’s tariffs after Downing Street acknowledged the UK is unlikely to be spared.

The US president is set to unveil sweeping import taxes on goods from countries around the world on Wednesday, an event Mr Trump has dubbed “Liberation Day”.

First Minister John Swinney has vowed to take “every opportunity” to discuss the “damaging” tariffs on a visit to New York later this week.

Guy Hinks, the Scotland chairman of the Federation of Small Businesses, said the extra costs would be “the last thing businesses need right now”.

Sir Keir Starmer's Government has been trying to negotiate an economic deal with the US, which it is hoped could protect UK firms from the worst impacts.

First Minister John Swinney and US President Donald Trump | PA

But that will not be in place before Wednesday and trade talks alone are unlikely to be enough to exempt the UK from the president's desire to impose tariffs on imports to the US from around the world.

Mr Trump has already announced a 25 per cent import tax will be introduced on all cars imported to the US, a measure which will be a blow to the UK's automotive industry.

Some 16.9 per cent of UK car exports were to the US last year, representing a total of more than 101,000 units worth £7.6 billion.

The levy is on top of a series of tariffs set to come into effect on April 2 , which could include a general 20 per cent tax on UK products in response to the rate of VAT, which Mr Trump deems to be discriminatory against the US.

The Prime Minister's official spokesman said: "When it comes to tariffs the Prime Minister has been clear he will always act in the national interest and we've been actively preparing for all eventualities ahead of the expected announcements from President Trump this week, which we would expect the UK to be impacted by alongside other countries.

"Our trade teams are continuing to have constructive discussions to agree a UK-US economic prosperity deal.

"But we will only do a deal which reflects this Government's mandate to deliver economic stability for the British people, and we will only act in the national interest."

Asked whether the Government had given up hope of a UK-US deal being signed before the tariffs are announced, the spokesman said he is "not going to put a time frame on those discussions" but that they are "likely to continue beyond Wednesday".

Mr Trump believes tariffs will protect US businesses from unfair competition from foreign rivals.

The new tariffs could derail the Government's plans to grow the economy, and they come into force just after Chancellor Rachel Reeves made a series of cuts at the spring statement in order to restore a narrow buffer in the public spending headroom.

The budget watchdog has warned that a full-blown trade war, in which the UK responds in kind to Mr Trump's tariffs, could knock 1 per cent off gross domestic product, a measure of the size of the economy, and wipe out Ms Reeves' headroom.

The assessment from the Office for Budget Responsibility helps explain why so far, unlike other economies such as the European Union, Sir Keir's government has refrained from retaliating against Mr Trump.

The Prime Minister's spokesman said: "You've got the OBR's modelling and we've said previously a trade war with the US is clearly not in anybody's interests.

"We continue to have constructive discussions on agreeing a deal with the US, but at the same time, we've also been clear that all options are on the table, we obviously reserve our right to respond, to protect our industries.

"But we want to take a calm and pragmatic approach to this.

"I think British industry has also been clear that they want to see the Government having a dialogue with the United States and that's what we're going to continue to do and seek to achieve."

Tory shadow trade secretary Andrew Griffith said: "This news is potentially a hammer blow not just to British businesses and workers but to his own Chancellor whose creative accounting at the emergency budget fails to include the impact of tariffs.

"Labour claims talks with the US are going 'well'. But if this is what well looks like, I wouldn't like to see what the opposite looks like. The Prime Minister has so far failed to come up with the goods, he needs to rekindle our US trade deal.

"This is just further proof that, when Labour negotiates, Britain loses."

Liberal Democrats leader Sir Ed Davey said the UK should be prepared to hit back at Mr Trump's tariffs.

Sir Ed said: "Ministers have rightly tried to avoid Donald Trump imposing his destructive tariffs on British businesses - but as we knew all along, Trump doesn't care.

"Just asking nicely clearly doesn't work with Trump, so we have to stand tall with our allies in Canada and Europe and show that we will not be bullied.

"That means being prepared to impose reciprocal tariffs if necessary, including on Elon Musk's Teslas, and urgently negotiating a better trade deal with the EU to show Trump we have alternatives."

Mr Swinney will be in New York later this week for the annual Tartan Week celebrations, and said he would take every opportunity he could to discuss the prospect of tariffs on products such as Scotch whisky and salmon.

Opening the new Destiny Bridge, which connects the A9 with the A93 and A94 over the River Tay in his Perthshire North constituency, the First Minister said: “I’ve made very clear our concerns about tariffs, and I will be using the opportunity of being in the United States to promote a range of Scottish products and businesses, including Scottish whisky. That will be part and parcel of our discussions.”

He added: “I want to make sure that we use every opportunity to avoid the presence and the effects of tariffs affecting Scottish products. They are damaging to trade and we thrive on trade, so every opportunity will be used to do exactly that.”

The Scotch Whisky Association welcomed Mr Swinney’s comments.

A spokesperson said: “We fully support the First Minister’s efforts to highlight the investment the Scotch whisky industry already brings to the US economy and the value it adds to the US hospitality sector.”

Mr Hinks said the tariffs would be a “major headache”.

He added: “With six out of ten small exporters currently trading with the US, many firms will be directly affected. They need the support to mitigate these changes and continue to thrive in a competitive global market.

“The other concern is that any disruptions to trade could have a huge ripple effect. Nine in 10 SMEs believe exporting is important to the overall economy, and the United States is the single biggest export market for small exporters, outside of the European Union.

“If there are SMEs suddenly and directly put at risk for their business and the people they employ, the state should consider assistance to navigate the turmoil and help the firms bounce back as going concerns."