US Tariff Relief For Automotives And Jet Engines

Last Tuesday there was some good news for British exporters, after President Trump signed an executive order on the trade deal with the UK. Keir Starmer and Donald Trump presented the deal, which covers aerospace and the auto sector, at the G7 summit in Canada. Reacting to the news, here’s what our Head of Trade Policy William Bain told journalists.

“News that the trade deal with the US has been agreed on automotives and jet engines will be music to the ears of affected sectors.  

“They are desperate for tariff relief and lower costs, and this new Executive Order should deliver that.  For the automotive sector, operating under 27.5 percent tariffs on sales to the US over the past two months has been tough. A reduction to a 10 percent levy from the end of June will help order books, investment and jobs. 

“However, for steel and aluminium firms the wait goes on. They have faced 25% US tariffs for the past three months and are still awaiting the resolution of outstanding issues on the new US quotas.  

“But the deal does also implement zero tariff arrangements on UK Rolls Royce jet engines by the end of this month - a vital part of aerospace supply chains in the US.  

“Both Governments should now build upon this current deal to secure an agreement on digital trade to make trans-Atlantic trade cheaper, speedier and more efficient. We also need to make the case for further tariff relief in other goods sectors affected by the US reciprocal tariffs, from clothing to food and drink.” 

Click here to read the full press release.

Price Pressures Persist for Business

With cost pressures rising, all business eyes were on the latest inflation figures released on Wednesday. CPI remained at 3.4% in the year to May, the highest for more than a year. Food prices grew for the third month in a row. Our Head of Research, David Bharier, told journalists:

“Inflation easing slightly to 3.4% in May was widely expected, but this elevated level remains a real concern for businesses and confirms that price pressures persist.   

“Our research shows that firms’ price expectations jumped after the Autumn Statement, which included the increase in employer NICs, and again following the US tariff announcement. Taxation is now the most cited concern among firms. 

“In the short term, there are some clear headwinds. The recent escalation between Israel and Iran poses a significant risk to global supply chains. Any major disruption in the Strait of Hormuz could echo the supply chain shock of 2021, with surging oil and shipping costs. Many smaller businesses will have little capacity to absorb these pressures. 

“The mounting uncertainty makes it more likely that the Bank will hold the interest rate at 4.25% tomorrow. Nevertheless, a path towards further rate cuts will be greatly welcomed by businesses to get borrowing costs down. But other steps are needed to alleviate cost pressures, including a plan to ease the tax burden businesses face, and further reductions in trade friction between both the EU and USA.” 

Click here to read the full press release.

Infrastructure Strategy Must Become Reality 

 The Government’s long-awaited Infrastructure Strategy was published on Wednesday. It outlines a 10-year plan for economic, housing and social infrastructure, aimed at driving growth. Here’s our media response from Jane Gratton, Deputy Director of Public Policy.

 “A 10-year strategy for infrastructure will give businesses and supply chains much needed clarity and certainty to plan. Crucially it will create a landscape for crowding in investment across all regions of the country.   

“Successful delivery will be dependent on the detail and having the skilled workforce in place.  So, it’s vital this strategy is underpinned by a robust skills strategy and an efficient and effective planning system. 

“To drive growth, we now need to see strategy become reality, with change implemented at pace and a pipeline of projects on the ground.” 

Click here to read full industrial strategy.