US Tariffs

Lord Stockwood Excerpts

Monday 23rd February 2026 Lords Chamber

[Lord Lamont of Lerwick]

To ask His Majesty’s Government what assessment they have made of the impact on the UK economy of the announcement by President Donald Trump of increased tariffs, and what representations they plan to make to the government of the United States.

[The Minister of State, Department for Business and Trade and HM Treasury (Lord Stockwood) (Lab)]

My Lords, the Supreme Court ruling does not affect the majority of trade under the economic prosperity deal, including the sectoral tariffs agreed on steel, pharmaceuticals and automotives. The Business Secretary spoke to his counterpart at the weekend and underlined his concerns about uncertainty for businesses and reinforced the need to honour the UK-US trade deal. We continue to engage with the Administration at all levels. Our priority remains to secure the best possible outcome for British businesses.

[Lord Lamont of Lerwick (Con)]

I thank the Minister for that helpful reply. Does he agree that, following the Supreme Court judgment, the decision of the United States President to impose, even on a temporary basis, tariffs of up to 15% is deeply damaging to confidence, both in this economy and in that of the United States? Can the Minister say a little more about what now remains of the trade deal negotiated by the Government less than a year ago, which was supposed to give us a preferential advantage over other European countries, but now we all face a universal global tariff of 10%?

Has the Minister also seen the warning over the weekend from the United States trade representative that, in order to assess what tariffs are necessary for the future, “most major trading partners” of America will face accelerated investigations into trading practices, which, of course, could include things such as pharmaceutical pricing, which were excluded from the agreement before? Will the Government undertake not just to defend Britain’s actions and Britain’s interests vigorously but also to ensure that the outcome of these discussions leaves us no worse off than we were before these unfortunate announcements?

[Lord Stockwood (Lab)]

The noble Lord raises a number of challenging and fast-moving issues, and I will try to respond as fully as I can. It is worth stating that the UK secured that preferential deal last year, driven by the Prime Minister’s direct engagement with President Trump. That was trying to give British businesses certainty and competitive advantages. The ruling at the weekend does not affect our preferential treatment in the key sectors such as pharma, cars and steel that the noble Lord mentioned.

The Business Secretary spoke to US trade representative Jamieson Greer this weekend, making clear our concerns about uncertainty and our degree of confidence in the honouring of those agreements that we needed, and he had those reassurances. UK officials across Whitehall and Washington are engaging intensively with the US as we speak, and those discussions will continue all of this week, at which time we can update the House. It is worth stating that we have always had a cool-headed and pragmatic approach to trade deals, and while I would not comment on other Governments’ policies, we do have a competitive advantage globally in the sectors we set out in the original negotiation. The biggest beneficiaries of this weekend’s announcements are those trade barriers coming down for other countries, but we still have the best deal globally, and we continue to negotiate to retain that preferential position.

[Lord Hannay of Chiswick (CB)]

My Lords, would the Minister say whether the Government’s information leads them to suppose that the President’s choice of 15% and its differential impact on countries was deliberate or inadvertent?

[Lord Stockwood (Lab)]

As a Minister only six months into the job, I have uncertainty in my own mind sometimes; I am certainly not going to comment on the US President. What I can say is that we remain the only country that has secured a 10% tariff on auto, securing hundreds of thousands of jobs; we are the only country in the world with a 0% tariff on pharmaceuticals; and we are the only country in the world to benefit from a 25% tariff on steel, aluminium and other derivatives. We believe that we will retain those competitive positions, but our position is to control the controllables that we have today and negotiate to retain those benefits for UK businesses.

[Lord Fox (LD)]

My Lords, I am sure that industry is grateful for the sympathy the Minister has expressed from the Dispatch Box, and we are all encouraged by the hopes that the Government have expressed. But we all know that the opinions of trade officials often differ from those of the President. The uncertainty that is now surrounding all of British manufacturing is huge. What advice are the Government now giving to manufacturing businesses? What conversations have been had with the manufacturers, and how should they behave in the light of this huge uncertainty?

[Lord Stockwood (Lab)]

The question of certainty, raised by the noble Lords, Lord Lamont and Lord Fox, is critical to business. We live in a world that is changing rapidly and evolving minute by minute—I just checked my BBC feed on my way into the Chamber this afternoon. What I can say is that this Government have a plan: for the first time since the 1960s, we have an industrial strategy that focuses on our competitive advantage in automotive, technology and pharmaceuticals. It remains important to have clarity on our comparative advantage, and we remain in negotiation with all those key sectors; indeed, the pharmaceutical sector has the most preferential deal globally. I was due to have a meeting at 3 pm today with the pharmaceutical sector, and this has overridden that. These are fast-moving events. We remain cool-headed, trying to negotiate on behalf of UK businesses, and we are confident that our preferential relationship with the US will bear dividends as things develop this week.

[Lord Howell of Guildford (Con)]

My Lords, I know that history does not always repeat itself, but would it be a kindness at this stage to remind President Donald Trump that the American tariff protections of the 1930s by Smoot and Hawley played a major part in accelerating the onset of the Second World War?

[Lord Stockwood (Lab)]

Yes, I thank the noble Lord for that.

[Lord Wigley (PC)]

My Lords, the Minister quite rightly referred to pharmaceuticals and their importance. Can he clarify whether the derogation regarding pharmaceuticals will include the equipment and technology used for testing the need for and application of pharmaceuticals?

[Lord Stockwood (Lab)]

I will have to come back to the noble Lord on that question. The pharmaceuticals deal was for medical exports to the US for at least three years.

[Baroness Royall of Blaisdon (Lab)]

My Lords, while we welcome the industrial strategy that was mentioned by my noble friend the Minister, does he agree that, in these deeply uncertain times when there is much instability, the reset with the European Union on which our Government have embarked grows in importance by the day?

[Lord Stockwood (Lab)]

As I mentioned, the cool-headed approach that the Government are taking includes many of our global trading partners. It is worth reminding the House that, while the US is a critical trading partner, with £330 billion of bilateral trade, the EU makes up 40% of our global trade and is an incredibly important partner, so those negotiations are ongoing. We have to redefine our position in the world, not just with the EU but as we have done with our trade deal with India and as we are doing with the Gulf states et al. It is undeniable that our relationship with Europe will be critical to our economic growth over the coming decades.

[Lord Londesborough (CB)]

My Lords, somewhat bizarrely, the trading partners of the US that are the greatest beneficiaries of President Trump’s new regime are Brazil, China and India, which are currently looking at net falls in their tariffs of 5% to 13%, while the UK, in spite of our preferential status, will see a net average tariff increase of 2.1%. That is the highest rate in Europe and compares with the eurozone’s 0.8%. I am quoting figures from Global Trade Alert, a trade monitoring service. Does the Minister recognise these figures, and what is his reaction to them?

[Lord Stockwood (Lab)]

I recognise the figures quoted, but they are speculation at this stage. The deals on preferential rates for farmers, automotive, et cetera were agreed terms, but that was the beginning of the negotiations, not the end. The preferential deal that was secured was brought about by direct engagement between the Prime Minister and President Trump. The EPD negotiations remain ongoing, and we will look to further protect the UK’s interests with further announcements over the coming weeks. It is worth reminding the House that the UK was the first country to see tariffs removed for civil aerospace goods, and we remain the only country to retain those secured 10% tariffs on automotive, steel and aluminium. We are prepared to fight for British businesses from here on in as well.

[Lord Wallace of Saltaire (LD)]

My Lords, we all know that President Trump is extremely transactional in his international relations and respects only those who bargain hard with him. Are His Majesty’s Government considering imposing a new and hard tax on foreign-owned golf courses?

[Lord Stockwood (Lab)]

I am not aware that that is part of the negotiations.

[Lord Sikka (Lab)]

My Lords, is there a role for the World Trade Organization in this tariff-led turmoil?

[Lord Stockwood (Lab)]

At the moment, these are bilateral conversations. We are acting in good faith and hope that they will come to a successful resolution.

[Lord Hunt of Wirral (Con)]

My Lords, the Government are trying to reassure the nation that they do not expect the ruling to affect the majority of trade under the economic prosperity deal, but as the noble Lord, Lord Fox, pointed out, there is huge uncertainty. Can the Minister clarify precisely what proportion of UK exports to the United States that represents and which sectors now fall outside that protection?

[Lord Stockwood (Lab)]

The confidence that I am trying to relay is not unfounded. As we saw from last week’s announcements, part of the macroeconomic situation that we are trying to turn around has seen inflation fall and the largest recorded government surplus since the 1990s. That is the overall message that we are trying to relay. In terms of specific industries, the negotiations are ongoing. I do not have the specific numbers to hand, but I remind the House that, globally, we have the most preferential deal with the rates that we have secured for industries, and we will continue to fight on behalf of British business.

[Lord McNicol of West Kilbride (Lab)]

My Lords, one way to deal with this issue is by the acceleration of the free trade agreements. Under the last Government, we had agreements with New Zealand, Australia and then the CPTPP. Under this Government, we have accelerated those agreements. The Minister mentioned the six Gulf states and the GCC free trade agreement. Is there any update on the GCC FTA negotiations and what comes next?

[Lord Stockwood (Lab)]

My noble friend raises a really important question about our current trading relationship based on the new world order that we find ourselves in. I do not have a specific update on the GCC deal; my noble friend knows that I was out there a couple of weeks ago, and we are incredibly close to an agreement. I should like to reassure the House that, in my travels around the globe, I find that we are still seen as a major place for investment globally. We have competitive advantage in our industrial strategy, in our rule of law and in our talent base. The trade deal that we did with India was significant, and the trade deal with the US remains the first and best trade deal that the US has negotiated. While this weekend has thrown up some bumps in the road, we remain confident. The negotiation with the Gulf states is ongoing but remains very positive, and we hope to have some good news in the coming weeks.

[Lord Johnson of Lainston (Con)]

My Lords, I read somewhere that the Department for International Trade is going to be reducing the number of experts in the field from 1,600 to 1,000. Is now really the time to be reducing our global staff by a third when our businesses need all the support they can get at this time of tariff turmoil?

[Lord Stockwood (Lab)]

I thank my noble predecessor for the question. We are trying to balance the pressure from the public world to right-size our Civil Service more broadly to make it more effective—technology and information are tools that can help us with that. We are also trying to balance the public purse to ensure that we have the right quality of people to address the significant challenges that we have as a Government. It is not a zero-sum game. We have very talented people; I addressed the team in the Gulf when I was out there a couple of weeks ago, and I remain impressed by the quality of the people that we have in this sector. But it is undeniable that we must make sure, based on the advantages that we have in technology and information flows these days, that we also have the right number of people in markets at the same time.

[Lord Skidelsky (CB)]

My Lords, is there anyone in the Government thinking about alternatives to trade wars or trade deals as a way of organising the economic affairs of the world? The noble Lord, Lord Howell, is quite right: historically, tariffs tend to set the ground for war. That was also true before 1914, when there was a big increase in world tariffs. Who in the Government is thinking about alternative ways of organising the trade relations of the world? I am asking this not as a matter of policy but as a matter of thinking about the world we seem to be drifting into.

[Lord Stockwood (Lab)]

The noble Lord raises a really important philosophical question. From my personal experience during the last six months, we are trying to readjust to both a post-Brexit world and a new world order with what we are seeing in the US, China and the EU in particular. We have to make sure that we are protecting our own economic interests. I am seeing a high regard still for our soft power in the world. We play that card particularly well, whether it is the institutional base of our universities, our talent base or our research. We are trying to make sure that we play to the assets and capabilities that we have. Trade remains important, but we also have to react to the new world order and be responsive to it in order to make sure that we are not left behind.