Rachel Reeves needs to reassure Japanese businesses that she has a plan for US President, Donald Trump’s trade tariffs

There is growing concern from Japanese businesses in the UK about US President Donald Trump’s trade tariffs

25 March 2025 | Author: Kohtaro Hirota

Rachel Reeves needs to reassure Japanese businesses in the Spring Statement that she has a plan if Donald Trump ramps up his tariffs against the UK.

Kohtaro Hirota, Senior Manager said:

Although currently the UK is not heavily involved, there is growing concern from Japanese businesses in the UK about US President Donald Trump’s trade tariffs.

Currently the UK has a slight trade deficit to the US, meaning the UK is relatively in a ‘preferable position’ in this chaotic situation because Donald Trump has no strong reason to levy harsh tariffs on the UK. But he is unpredictable and his policy to impose some fixed percentage tariffs on ‘worldwide’ imports for some goods will eventually drag the UK into this tariff war.

The Prime Minister, Kier Starmer visited the White House in February. The UK Government is keen to have a free trade agreement with the US which would reduce the impact of tariffs or remove them entirely. When they negotiate, they should make the most of their ‘preferable position’ and the Chancellor should comment on the progress of this negotiation in the Spring Statement to reassure international businesses that the deal is moving forwards.

Currently, when some goods and products made in the UK are exported to the US, they are far less impacted by the cost of exporting overall. Especially those from countries Donald Trump has levied harsh tariffs on. This means, amid this chaotic tariff war, it could be advantageous for foreign businesses to base themselves in the UK and manufacture their goods here, including businesses from Japan. This would also bring jobs and investment from those countries, which the UK desperately needs to improve its struggling economy.

Kohtaro said:

Encouraging businesses to come to the UK to manufacture their goods by showing some clear progress on a free trade agreement with the US would be a win-win for the UK and international businesses. However, Rachel Reeves would still need to say what her plan is if Donald Trump enacts further tariffs on the UK before Japanese businesses would feel comfortable investing in manufacturing more products in the UK.