UK-US Trade and Tariffs

Statement

18:14:00

My Lords, with the leave of the House, I shall repeat a Statement made earlier in the other place by my right honourable friend the Secretary of State for Business and Trade. The Statement is as follows: “The UK has a strong and balanced trading relationship with the US worth £315 billion, which supports 2.5 million jobs across both countries. This is second only to the EU, where our trading relationship is worth £791 billion. Yesterday evening, the United States announced a 10% reciprocal tariff on UK exports, and it has today imposed a 25% global tariff on cars. That follows the application of tariffs of 25% on US imports of steel, aluminium and derivative products announced on 12 March. No country was able to secure an exemption from those announcements, but the UK did receive the lowest reciprocal tariff rate globally. Although that vindicates the pragmatic approach that the Government have taken, we know that while these tariffs are still being levied, the job is far from over for us. We are, of course, disappointed by the increase in tariffs on the UK and on other countries around the world. The impact will be felt among all trading nations. However, I would like to update the House on how the UK can navigate these turbulent times, acting in our national interest and for the benefit of all our industries. I would also like to take this opportunity to thank my American counterparts, Secretary of Commerce Howard Lutnick, US Trade Representative Jamieson Greer and Special Envoy Mark Burnett for their engagement over the past few months. While any imposition of tariffs is deeply regrettable, from the beginning they promised to make themselves available and they have been true to their word. I look forward to our continued engagement over the days ahead. As Members will know, since the new US Administration took office, my colleagues and I have been engaged in intensive discussions on an economic deal between the US and the UK, one that would not just avoid the imposition of significant tariffs but deepen our economic relationship. On everything from defence, economic security, financial services, machinery, tech and regulation, there are clear synergies between the US and UK markets. That is reflected in the fair and balanced trading relationship that already exists between our two countries. I can confirm to the House that those talks are ongoing and will remain so. It is the Government’s view that a deal is not just possible but favourable to both countries, and that this course of action serves Britain’s interests as an open-facing trading nation. I have been in contact with many businesses, across a broad range of sectors, including those most affected, who have very much welcomed this approach. It is clear to me that industry itself wants to grasp the opportunity that a deal can offer and welcomes the Government’s cool-headed approach. In increasingly insecure times, I have heard some Members cling to the security of simple answers and loud voices. I understand the compulsion, but I caution Members of this House to keep calm and remain clear-eyed on what is in our national interest, not simply to proclaim that we follow the actions of other countries. The British people rightly expect the Government to keep our country secure at home and strong abroad. An unnecessary, escalating trade war would serve neither purpose. True strength comes in making the right choices at the right time. Thanks to the actions of our Prime Minister, who has restored Britain’s place on the world stage, the UK is in a unique position to do a deal where we can, and to respond when we must. It remains our belief that the best route to economic stability for working people is a negotiated deal with the US that builds on our shared strengths. However, we do reserve the right to take any action that we deem necessary if a deal is not secured. To enable the UK to have every option open to us in the future, I am today launching a request for input on the implications for British businesses of possible retaliatory action. This is a formal step, and it is necessary for us to keep all options on the table. We will seek the views of UK stakeholders over four weeks, until 1 May 2025, on products that could potentially be included in any UK tariff response. This exercise will also give businesses the chance to have their say and influence the design of any possible UK response. If we are in a position to agree an economic deal with the US that lifts the tariffs that have been placed on our industries, this request for input will be paused and any measures flowing from it will be lifted. Further information on the request for input will be published on great.gov.uk later today, alongside an indicative list of potential products that the Government consider most appropriate for inclusion. I know that this will be an anxious time for all businesses, not just those with direct trade links to America. Let me say very clearly that we stand ready to support businesses through this. That starts by making sure they have reliable information; any businesses that are concerned about what these changes mean for them can find clear guidance and support on great.gov.uk, where there is now a bespoke web page. This Government were elected to bring security back to working people’s lives. At a time of volatility, businesses and workers alike are looking to this Government to keep our heads, act in the national interest and navigate Britain through this period. While some may urge escalation, I simply will not play politics with people’s jobs. This Government will strive for a deal that supports our industries and the well-paid jobs that come with them, while preparing our trade defences and keeping all options on the table. This is the right approach to defend the UK’s domestic industries from the direct and indirect impacts of US tariffs in a way that is both measured and proportionate, while respecting the rules-based international trading system. As the world continues to change around us, British workers and businesses can be assured of one constant: this is a Government who will not be set off course in choppy waters. The final part of our approach will be to turbo-boost the work this Government are doing to make our economy stronger and more secure, including our new industrial strategy. We will strike trade deals with our partners and work closely with our allies for our shared prosperity. We have a clear destination to deliver economic security for working people. We are progressing a deal that can do that, laying the foundations to move quickly should it not, and ensuring that British businesses have a clear voice in what happens next. I commend this Statement to the House”.

18:21:00

My Lords, I regret to tell the Minister that the Statement that we heard in the other place, which she has just repeated, has only increased the level of uncertainty that British businesses, workers and families are feeling at this critical time. The announcement of new tariffs is a blow to our economy, making goods more expensive, weakening demand and devaluing the pound in people’s pockets. Tariffs make us all poorer. Free trade, not protectionism, has driven Britain’s prosperity for generations and lifted billions of people worldwide out of poverty. At a time when our economy is already fragile, I agree with the noble Baroness and her ministerial colleagues that we need cool heads. While I welcome the Government’s stated commitment to securing a trade deal with our closest ally and largest single-country trading partner, we must surely now be honest about what has actually happened. The truth is that the Government have not secured any special treatment from the White House. The Secretary of State and the Minister speak of success, but surely there is little to celebrate. Britain now finds itself in the same tariff band as countries such as Kosovo, Costa Rica and the Congo. The impact of these tariffs on our industries will be severe. The automotive sector remains burdened by a 25% tariff on £8 billion-worth of car and auto parts exports. Our steel and aluminium industries continue to face 25% on exports, including over £2 billion of derivative products containing high steel and aluminium content. On a volume-weighted basis, our total £60 billion in UK exports will have an effective tax of what I calculate to be 13%. This is not a moment of triumph for the Government. It is, I suppose, a moment that vindicates those who argued for Britain to have control over its own trade policy, but let us be clear: having control over trade policy means something only if that control is used effectively and, thus far, the Government have failed to do so. Last week, the Office for Budget Responsibility warned that tariffs such as these could knock up to 1% off GDP. This comes at a time when the UK is already in a per-capita recession and when market confidence is shaky. Our businesses, which should be driving economic recovery, are instead facing increasing headwinds caused by this Government’s decisions. Instead of supporting businesses, this Government are placing additional burdens upon them. Business taxes have risen, business rates have more than doubled for many, the so-called family business death tax has been introduced, and flawed recycling charges are adding yet another layer of unnecessary cost and bureaucracy. With these challenges mounting, it is no surprise at all that business confidence remains at rock bottom. Then there is the issue of energy costs, which we have just been discussing. A manufacturer in Birmingham, UK now faces energy bills four times higher than a competitor in Birmingham, Alabama. The Government should be addressing this cost disparity, which has a far greater impact than tariffs; instead, businesses are being left to struggle on their own. Only last week, we debated the Second Reading of what I termed the unemployment Bill. Overseen by the Secretary of State, it looms large: the OBR has not even been able to quantify how damaging the Bill will be for the economy. We do not need more uncertainty, more costs or more bureaucracy imposed on businesses. I suppose the Government felt obliged to rush that Bill through in their first 100 days and are now panicking and trying to push the Bill through by secondary legislation. Well, I leave that to the Committees of this House to deliver their verdict on. Labour will, no doubt, claim that these tariffs are beyond its control. But let us remember that the previous Government had already made significant progress towards a US-UK trade deal. When President Trump was last in office, negotiations had reached an advanced stage. However, when the Democrat Party and President Biden were elected, his Administration ended all free trade negotiations. The unfortunate reality is that we could not implement a US trade deal until we finally left the EU, which coincided with the end of President Trump’s first term. Well, the ball is now in the Government’s court. What have they done? I would contend from these Benches that, instead of securing a deal, they have wasted months; instead of acting swiftly to engage with the US Administration, they delayed; instead of protecting British businesses, they have let them down. Their failure means that British businesses will now lose out and British jobs will be put at risk. The burden of these tariffs will not be borne by Ministers sitting comfortably in Whitehall but by the small manufacturers, the steelworkers, the automotive engineers and the entrepreneurs who drive our economy forward. There is another issue that the Government must address: retaliatory tariffs. The Government must recognise the harm that a retaliatory trade war would inflict on British businesses and consumers. Escalating this dispute will not help our exporters; it will only drive up costs, disrupt supply chains and make it even harder for British firms to compete globally. Will the Minister give this House a clear, binding guarantee that Britain will not escalate the situation by imposing retaliatory tariffs on US goods? The last thing businesses need is yet another wave of uncertainty. The Government must take the responsible path, de-escalate tensions, negotiate a fair outcome and avoid worsening an already dire situation. In her Statement, she referred to the fact that the Government are now launching a consultation period on the dangers of retaliatory action. Why on earth are we embarking on such an exercise? Can we please be brought up to date with the website that has been opened specially today? Indeed, the Statement warned us that more input would be published today. Can she please bring us up to date with what has happened? May I mention the Windsor Framework? We have to consider the effect on Northern Ireland of what has happened today. Under that framework, there is a duty reimbursement scheme available to assist businesses affected by these tariffs. However, many businesses are still unaware of that support. The Government must do more than just acknowledge its existence. They have to take proactive steps to raise awareness for businesses in Northern Ireland and ensure that the scheme is as streamlined and accessible as possible for businesses trying to navigate these challenging conditions. Finally, has the Minister read the comments made today by the chief executive of Make UK, the director-general of the BCC, the advisers at the IoD and many other trade bodies, who say what a black day this is for British business. What help can the Government give to lift the veil of uncertainty that they have created today by this Statement?

My Lords, this is my first opportunity to ask the Minister questions. I give her my belated welcome to the portfolio. She is in a new world when it comes to the unjustified and aggressive trade war that the United States has been launching. My party was forged out of a campaign for free trade. We broke with others when they introduced protectionism. Our principled position on Brexit was based on a rejection of new barriers, new costs and more bureaucracy for businesses and uncertainty for consumers. These same principles apply to our revulsion at the unwarranted and unjustified applications of the new tariffs. They are, of course, on top of the pre-announced automotive, steel and aluminium tariffs. We should also recall the existing tariffs on UK exports to the United States. It means that, to take one example that is very close to my heart as I represented a textile-producing constituency in Scotland, the cashmere industry, the highest-quality sustainable product in the world now has a 35% tax tariff on exporting to the United States. What support are the Government intending to provide to some of our key exporting sectors now, rather than waiting until after a consultation? These Benches believe that we should have been consulting in advance of the announcement, as Canada did, not after it, so that we had a prepared proposal for a clear statement of intent, rather than a hope for the best in any agreement. Part of the Statement today that surprised and disappointed me was the news that only if we have not secured an economic agreement with the US will we propose corrective measures. This means that the timetable of UK actions is in the hands of the Trump Administration, not in the hands of our Government, and that surely is not acceptable. It is our duty to represent the interests of British industry and consumers, not the United States. Can I also ask for clear language? It now seems that we are simply seeking an economic agreement rather than a free trade agreement. What are we seeking from the Trump Administration? There is a world of difference between a comprehensive free trade agreement and cobbling together a number of bilateral agreements on services and goods simply to make a show of reaching some form of agreement. If the Minister could be clear in the language, I would be grateful. Furthermore, I sincerely believe that we have showed too much of our market offer to the United States, so it can see clearly the areas where we are willing to cede decision-making: closing tax avoidance for UK companies with profits over €20 billion that are not paying their fair share of tax within the United Kingdom; aligning our AI and data regulations to what the Trump Administration want rather than what this Parliament has legislated for; and reducing agricultural and food standards. Every other country with which we may seek an FTA now knows the areas where this Government are open to ceding ground. That, surely, is regrettable. Two responses today require more scrutiny: one from the Government and one from the Conservatives. The Statement says that the wholly unjustified tariff rate “vindicates” the Government’s “pragmatic approach”, but we know that, as far as the Trump Administration are concerned, the United Kingdom is in the same category as El Salvador, Guatemala and Uruguay—none of which even flourished a cringeworthy letter from a King in the Oval Office. The worst element of the Trump Administration applying the 10% tariffs is that we are now in the same category as Russia, for goodness’ sake. How is it a vindication of our pragmatic approach if Trump sees trading with the United Kingdom as the same as trading with Russia? The second argument we have heard today, including a bit that we got from the noble Lord, is that we may have fared better because we are out of the EU rather than in it—but that is only if we are starting from a higher base than what the reality is, with the biggest barriers that we have erected for our near trading neighbours. But the critical point is that the United Kingdom, for goods in particular but for services too, is one of the most interconnected trading economies in the world. Nearly 70% of our exports to the EU are intermediate input to the production of other goods and services, and the majority of UK goods manufactured in the UK are intermediate. Therefore, the majority of the goods that we make source parts and components from the EU, so we are impacted by the 20%. Will the Government’s assessment of the impact be not just a sectoral analysis but a full trade analysis, including all the impacts of what will be applied to our biggest trading market? Even the former Conservative Trade Minister Greg Hands said today that, as a result of Brexit, we now have a more complex means by which we are steering a path in the US-EU trade war. It is even harder, because the more concessions we give to the United States, the further we move away from the TCA. What is the Government’s assessment of trying to triangulate between the EU and the US? We on these Benches believe that the response has to be deeper co-ordination with the European Union. Before I close, an element that has not been mentioned today, which is particularly close to my heart, having co-chaired the All-Party Parliamentary Group on Trade out of Poverty for so long, is that this Parliament has debated long and hard about our relationship with developing economies, many of which are being hit very hard by the Trump Administration, and the response of this Government is to cut official development assistance and technical support for trade facilitation for developing economies. Our response is to be silent to the Trump Administration but to cut trade facilitation for emerging economies. This cannot be right for the United Kingdom as a free-trading nation. As I close, my appeal to the Minister is that we need urgent full co-ordination with Canada and the European Union, not necessarily just on the potential corrective mechanisms that may well be necessary and we believe will be justified, but to ensure that there are fully co-ordinated anti-coercion measures. These are not trade measures being introduced by the Trump Administration; they are economic coercion measures, and it was a tragedy that the previous Government dropped the anti-coercion instrument that we could have continued as a result of Brexit. We need urgent clarification on that. Finally, we need a European Union-UK-Canada co-ordinated response—I will call it Eureka. In response to the Trump Administration, we need a Eureka moment, not just a wait-and-see approach.

I thank the noble Lords, Lord Hunt and Lord Purvis, for their contributions. I feel that what I hear is a genuine, shared passion for supporting our businesses here in the UK, but also a sadness at barriers to the open trade that so many of us have valued for so long. There is a shared desire to avoid escalating retaliatory tariffs. The UK and the US have shared a fair and balanced relationship, one that has benefited both sides for many decades. We will both benefit as we strengthen this relationship further. Of course, we are disappointed by the US announcement last night of the 10% reciprocal tariff on UK exports and by the 25% global tariff on cars that has been imposed today. This follows tariffs of 25% on US imports of steel, aluminium and derivative products that were announced on 12 March. I understand the desire for clarity and urgency, and for a simple answer that can allay the many fears that are rightly troubling businesses at the moment, but this is a complicated environment and a complicated problem. Unfortunately, complicated problems rarely have simple answers. The reality is that it is going to be a co-ordinated effort, where we work out, together with our businesses and industries, a solution that is thoughtful, pragmatic and calm, informed by the data and not by the emotions that many of us may be feeling. The Secretary of State has been clear that we will always act in the best interests of UK businesses and consumers. As your Lordships know, throughout the last few weeks the Government have been fully focused on discussions on an economic deal with the US. We remain committed to doing this deal, which we hope will mitigate some of the impact that has been announced. I hope that, as the noble Lord, Lord Hunt, referred to, the House is not reading that there is cause for celebration in any of the news that we have announced. I hear the temptation to turn to the other names on the list of tariffs and draw comparisons, but that temptation is to turn inwards and point fingers. I urge all of us to avoid that temptation and instead think about how we work together with that wider community to support all our domestic economies. We reserve the right to take action if a deal is ultimately not secured. That is a key part of why we are today launching a request for input on the implications for British businesses of possible retaliatory action. This is a formal step, necessary for us to keep all options on the table, but also to form our understanding of how those key areas will be influenced. This exercise will also give businesses the chance to have their say and influence the design of any possible UK response. After all, we are acting on behalf of those UK businesses. I hear the call by the noble Lord, Lord Hunt, that the ball is now in our court. The Government’s preference is to resolve these tariffs through a mutually beneficial deal. They have also been clear that they will always stand up for that national interest. This is why that request for input is so important: to inform the Government’s preparation of their options. We know that it is a concerning time for both businesses and consumers, but it is important to note that this Government have made plenty of decisions which will have a positive impact on the economy in the weeks and months ahead. We are putting more pounds in people’s pockets by freezing fuel duty; boosting the minimum wage by up to £1,400 a year; and protecting working people, with no rise in their national insurance, income tax or VAT. Living standards are growing at their fastest rate in two years and the Spring Statement showed that each person will be £500 better off by the end of the Parliament. The OBR has said that the economy will grow every year from 2026 and that our planning reforms will lead to a 0.2% increase of GDP, worth £6.8 billion. The UK remains an open, outward-looking nation and one of the world’s leading advocates for free trade. We have also joined the CPTPP trading bloc, and we continue to pursue export-boosting trade deals with the Gulf Co-operation Council and industrial giants such as India. Our number one priority is growing the UK economy. A positive trading relationship with all our trading partners, including the US, the EU and all these others, will help us deliver that. I hear the call for a full trade analysis and understanding of when future export opportunities will be available to us. As we think about the impact on the automotive industry, we think about our key industries in the UK. We have used our industrial strategy to strengthen the UK’s automotive competitiveness. The Budget committed over £2 billion of capital and R&D funding to 2030 for zero-emission vehicle manufacturing and its supply chains. This long-term commitment is a vote of confidence in our automotive industry, supporting investment in its transformation as we accelerate to zero-emission vehicles. There was also over £300 million announced in the Budget to drive uptake of electric vehicles. Our industrial strategy will continue to be unreservedly pro-business, engaging on complex issues that are barriers to investment, such as energy prices and access to finance and skills—all through the lens of promoting investment. Getting the transition right and supporting the growth of the electric vehicle market in the UK could unlock a multibillion-pound industry and deliver high-paid jobs for decades to come. How will this impact our neighbours? I am thinking about the Windsor Framework in particular, and the opportunities for businesses to protect themselves through the Windsor Framework duty reimbursement scheme that has been referred to. This scheme is there to support businesses, ensuring that they can use it to mitigate any costs that may come from possible tariffs. Businesses should be able to contact HMRC for any information about the scheme. It will of course be a formative part of the advice to businesses we are giving through the great.gov website. I understand that working closely with businesses to make sure they have all the information they need is really important. The request for input has been opened and that information is already becoming available. It came online today, and we have already seen a significant number of requests and input coming through that process. This Government were elected to bring security back to working people’s lives. Businesses and workers alike are looking to this Government to act in the national interest and navigate Britain through this period. We will continue to progress on securing a deal that secures our industries while keeping all our options on the table.

18:47:00

My Lords, the Minister’s Statement and her answers seem to have completely lacked the time dimension, and I wonder why this is so. President Trump is embarking, in theory, on a huge programme of import substitution, major planning and investment for years ahead. There are some areas in which import substitution will not be possible, and others where it will take three or four years, by which time President Trump will be gone—unless he manages to wangle a third term. Should it not be our priority to analyse and to navigate our industries through all the complexities of this? We should point out that, in some areas, the attempt to have an import substitution, if it does not succeed, may lead to an improvement in our markets and profitability. Why do we not have a proper analysis, with positive elements put forward to reassure and explain where we are going?

I thank the noble Lord for the question. Engagement with business has to be at the forefront of this. Often, we interpret this through our own lens—our own understanding and feelings about being on the receiving end of those tariffs. But for some industries, as the noble Lord rightly points out, there could be an opportunity. It is not for us to reflect our perception of these tariffs on to an industry; it is up to us to operate within industry and hear from them about the impacts on their organisations, their employees and their future strategies. That is exactly why today’s request for input from industry is so important. There has been an ongoing engagement with industry for weeks and months in the run-up to this. We have been talking about the implications of this for business, but it has been on a hypothetical basis. We are now turning that into a far more tactical conversation. What is the consequence of what is happening? How can we, as your government, support you to navigate through this?

My Lords, I do not think that any Member in this Chamber envies the position of the British Prime Minister at such a time, with our relationship with the United States coming under such sudden strain on so many fronts in so short a time, whether diplomatically, militarily or indeed now economically. I think yesterday will be long remembered, sadly, as a day that might prove extremely damaging for world trade. I hope that my noble friend the Minister will agree, however difficult it is, that the sheer uncertainty of all this could in itself have an adverse impact on businesses in this country. But, in the face of all this, I support the Government’s measured approach. If I may use the words of the noble Lord speaking from the Opposition Front Bench, we must keep a cool head. I understand that my noble friend’s colleague, the Secretary of State for Business and Trade in another place, has asked businesses for further information. I take it—perhaps the Minister could confirm—that this will need to be done quite quickly. As I understand it, although there may be no firm date, 1 May is sometimes referred to as a day by which it might be possible for the United States and the UK to reach an agreement. It will be difficult, and I hope very much that we will remember the principle that Parliament and the Government decide what tax is levied on whom and for what. Finally, I hope my noble friend will use her good offices with the Government to enable this House to have a debate on these matters before things reach a critical juncture. If it ever came to the point where the United Kingdom decided to take firm action, it would be much better for the Government to know that they have the support of the House.

I thank my noble friend for that comment, and I agree that the best decisions are often made with cool heads. Sometimes it can be challenging to maintain that cool head, but I think that as a Government we have done well to make sure we navigate that on a calm and pragmatic basis. There is so much uncertainty, and I can feel the desire for clarity in this uncertain world. I feel that the request for input from business is a good way of crystallising some of that clarity, as we understand the impact and possible opportunities for next steps. But have no fear: although the deadline for that conversation or dialogue is 1 May regarding the request for input, there is continuous and ongoing engagement with our US counterparts about how we draw together an agreement. If such an agreement were to come into place, we have not put any artificial deadline on when that should or should not happen—and nor should we, because it would put the negotiations under undue strain. I am pleased and encouraged that the conversation and dialogue are happening regularly, that they are well received on both sides and that access is able to happen. So I agree—I hear the need for an informed decision about such responses. A debate on any response, as and when that comes to a position where it is more formed, is absolutely where we can provide some real value, and that would be a worthy place.

I congratulate the Minister on her appointment. This is our first interaction. We served on the GREAT campaign advisory council for many years until her ministerial appointment. I am reassured to hear that the Government want to be cool, calm and collected. I am also reassured that the Government are doing their best to try to get a deal with the United States of America. Donald Trump likes deals, so let us try to get one with President Trump. However, although the United States has £300 billion-plus of trade with the UK, we have £126 billion in services exports to the US—a huge services surplus that nobody talks about—which is not applicable for these tariffs. We should make the most of that strength. Even in goods, we have a small surplus. But the United States is only 13% of the world’s trade. Surely we should work with the other 87% of countries around the world to make sure that we continue with the rules-based multilateral trading system. Secondly, the Minister mentioned growth, and I will raise one of the best ways to generate growth. I am chair of the International Chamber of Commerce here, ICC UK. The ICC is the largest business organisation in the world, with 45 million members. Before these tariffs were announced, we laid out a plan for growth that could unlock £25 billion in trade growth. By digitising trade, we can take what takes three months on a paper-based trade down to one hour. Why do we not, as leaders, champion digital trade around the world and take a leadership role in these turbulent times?

Before my noble friend answers the noble Lord’s question, I urge all noble Lords to keep their remarks brief and put questions to the Minister rather than making this Statement an occasion for wider debate. This will allow all noble Lords who wish to receive answers to their questions to do so.

My Lords, it is a joy to be here with the noble Lord again, and I thank him for his question. Why do we not work with all sides and not just the US? My role is Minister for Investment, and I love trade and investment—and I do not see that this is a matter of decisions. I want to have a strong and vibrant trading relationship with the US, I want to have a strong and vibrant relationship with Europe, and I want to have a strong and vibrant trading relationship with many of the emerging economies. This is something that we can navigate; it is not a situation where we need to pick one at the cost of the other, and I am really excited about seeing how we build and develop on all those trading relationships all around the world. On growth, I share the noble Lord’s passion. I believe that the digital trade that we have is a huge opportunity. Already there is a lot that we do in the services piece that is worthy of celebration. Stitching that together alongside the digital surely has to be the future of the growth-driving economies that we see coming out of the UK. If I can promise noble Lords one thing, it is that I will be an advocate and ambassador as we champion the growth that we can drive through digital trade.

My Lords, I am grateful to the Secretary of State for his cautionary words in the other place, repeated here, about eschewing simplistic solutions and “loud voices”, following the imposition of these arbitrary and unwarranted tariffs, and to the shadow Secretary of State for advocating cool heads. That is vital. Does the Minister agree that, if the impact of this very regrettable development is to depress economic activity—which is all too likely, sadly—there needs to be a priority assigned to protect the most vulnerable in this country from its effects? Will she further comment on any co-ordinated action with other countries to mitigate the effects on those territories, particularly in the Commonwealth, whose economic resilience is far less than our own?

I share the right reverend Prelate’s passion for making sure that we are supporting not just businesses and consumers but communities and people—the people who live in the communities that are affected. A fulsome response is one that is felt by all. At this point, we are still hypothesising; we are still understanding what the implication could be, whether a trade agreement could be arranged and whether reciprocal tariffs could be made. We are still at a point where we need to understand and turn that theory into understanding the real impact on our economy, what it may look like and who would be the hardest hit. But absolutely—if this is something where we are going to see communities damaged, we will be looking to think about how we can support them through that.

My Lords, of course, it is absolutely right that we should look at what cards we might have in terms of any response that the UK might wish to give. Perhaps, being English, rather than “Keep calm”, it should be “Keep calm, carry on and drink tea”. I have two quick questions. One is to follow up on what was said by the noble Lord, Lord Bilimoria. He is absolutely right about trumpeting our great strength in financial services but also in business services. First, to what extent are the Government really prioritising that sector? Secondly, on priority in terms of the deal that we are trying to secure, we saw the chart on the BBC of all the different tariffs and percentages in all the different countries. Surely there is already a massive rush of people wanting to speak to US officials. Where does the Minister think we are in the pecking order?

I thank the noble Viscount for the questions—they are challenging to answer. I shall start with the second question first. Where are we in that pecking order? Unfortunately, we can see only our side of that conversation. I see that there is engagement. This is a dialogue where the phone is being picked up on the other side. Questions are being listened to. I heard the Secretary of State say this morning that he had already today been in dialogue. An ongoing conversation is happening, and I take some reassurance from that that our voice is being heard in that narrative. The noble Viscount is right that a lot of conversations will be happening, a lot of negotiations will be occurring, and I take reassurance that that is being listened to. On the extent to which we are championing particular sectors, there are examples where we champion sectors regardless of the outcome. We see that in the industrial strategy that we launched, where we have identified those key growth strategies and sectors that will support our future growth. However, as we understand particular sectors that may be impacted, that is one of the driving forces of the request for input that we have had—as we understand where those key risk areas are within our economy but also where the key opportunities are that perhaps we should be championing a little more.

My Lords, I recognise that the Government’s priority must be to achieve the best possible outcome in relation to tariffs between the UK and the US. I am cautiously optimistic that this Government will do a great deal better than the Conservative Government did over many years, despite the litany of excuses put forward by the noble Lord, Lord Hunt. Does my noble friend the Minister agree, however, that we should also throw our weight behind improving the deal for other countries that are, in many cases, facing much higher tariffs than the UK: first, in the interest of the global trading system; secondly, to save low-income countries, as other noble Lords have highlighted, from devastating economic damage—a multiple of the hit that the UK may suffer—and, thirdly, in the interests of the many UK companies whose businesses are based on supply chains between those other countries and the US?

On my noble friend’s question about the impact not just within the UK but outside, if we think about our supply chains, we see that so many are interconnected and have a fierce reliance not just on the UK, the US or Europe but on so many other countries that pass through those supply chains—especially when we think about things such as digital services that we are championing. Making sure that we support those industries, not just to support their economies and those that could be most in need but to support our supply chains, is something that would ultimately benefit both sides of that equation. I come back to the fact that, today, I am just speculating, because I still do not understand fully how those tariffs will affect our supply chains and some of the sectors within those other countries. Yes, we need to make sure that we have strong and robust supply chains and are supporting those nations that benefit most from the value of that international trade, but I cannot comment further on exactly what the specifics look like at this point in the absence of more detail.

My Lords, the Minister spoke about strengthening the US-UK relationship further and about a positive trading relationship with the US. This tone reflects the Pollyanna approach that seems to bear no relationship to the reality of we saw last night of the great game show-like display in Washington—an attempt to divide and rule. The noble Lords, Lord Purvis and Lord Bilimoria, spoke about working with the majority of the world’s trading countries—those countries that want to follow the rule of law and an orderly system—yet what we are hearing from the Government is again and again talk of leaving our long-term economic future in the hands of whether or not we are, from one day to the next, in President Trump’s favour. Surely, we must hear more about defending that rules-based order and working together, as the noble Viscount just said?

We need to think about what those defence options are for particular sectors and how we protect particular industries, such as the steel sector. There are remedies to make sure that we protect some of those key, leading industries that we need to think about. However, I strongly believe that there is an opportunity to expand our trading relationships with nations such as the US off the back of this. A firm commitment to doing our best to secure a trade deal with the US is still the safest and most secure economic way of navigating this challenging path.

The Statement says: “The final part of our approach will be to turbo-boost the work this Government are doing to make our economy stronger”. Does the Minister agree that, with all due respect, 0.1% of GDP growth in the UK economy since July 2024 is not achieving that goal? What will her priority be to fix it?

My Lords, 0.1% GDP growth is not enough. This Government have made no apology for putting growth as their number one priority. I think all sides of this House agree that driving up growth can only benefit the UK and the people operating within it. We take it incredibly seriously, which is why conversations such as this feel so at odds with trying to create an industry that thrives in and benefits from an open and free trade environment. It is why many of us feel sad as we think about tariffs, or reciprocal tariffs as a headwind to them. But we can secure an agreement with the US that allows us to navigate through this. There will come a time when we look back on this in the rear-view mirror and we are able to establish and support a lot of those sectors that we rely on to support growth. We will hold dear a lot of the principles that we have already written down and they will steer us through that, whether it is things such as the industrial strategy or going through and identifying those core sectors that the Government will wrap their arms around and support to make sure that our growth numbers are not 0.1% or 0.2% but 1%, 2% and then beyond as we really try to support it. But I know that it is not a quick fix. I understand that we cannot just go to the growth cupboard in the corner and take growth out of it. A decision to turn to growth does not drive growth—multiple small cumulative decisions help turn the ship towards something that supports businesses and communities to grow. For example, it is about thinking about how in some instances regulation is acting as a headwind against growth and enabling things such as planning to make it easier for businesses to build factories and data centres in their communities to help drive that growth. We are seeing a lot of those initiatives to try to shape and encourage growth. However, I share the sadness that sometimes, it feels as though, when we are in a world talking about tariffs, that works against some of that growth agenda.

I congratulate the Minister on her appointment. She brings a great deal of business experience to the House. The UK is still a great place to invest in. We have one of the greatest creative economies in the world; we should be pushing that and making it clear. It is not a case for gloom.

I am shamelessly championing and promoting the UK and all its wonderful benefits wherever I can, and will continue to do so. I am a natural optimist by heart and, even today, I am still incredibly optimistic and excited about the opportunity that the UK presents.

House adjourned at 7.08 pm.