Analysis

​Scotland should take a warning from Donald Trump 25% tariffs on 'day one' of presidency

Donald Trump has said he will introduce 25 per cent tariffs on goods coming from Canada and Mexico on day one of his presidency

It may be Canada, Mexico and China that are set to suffer the first blow from the tax levying fist of incoming president Donald Trump, but Scotland needs to brace itself for future tariffs.

Donald Trump has, over the course of his presidential campaign, repeatedly insisted he wants to introduce a tax on all foreign-made goods.

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And just less than a month after the US election, he has only gone and done it, with an announcement that he will implement a 25 per cent tax on Canada and Mexico, plus an extra 10 per cent levy on China, “from day one” of his presidency.

It is a move Mr Trump insists will raise tax revenues for the US and boost the domestic jobs market. However, he is ignoring warnings from US economists who have argued he is cutting off his nose to spite his face. In practice, they say, it is the domestic buyer that will be responsible for the tax and, in turn, the consumer, potentially sending the cost of living sky rocketing for Americans. But Mr Trump is ploughing ahead with the policy nevertheless.

The taxes he says he will introduce for Mexico, Canada and China on January 20 have a somewhat specific motive: he claims the decision is linked to combating drug smuggling and, in the case of the two nations which share a land border with the US illegal immigration from the countries. Yet, from his previous campaign statements, any country with a significant trade relationship with the US could soon find itself a pawn in Mr Trump’s political game. For Scotland, any additional levy - and resulting hit to trade - could be significant.

Scotland counts the US as its top destination for goods exports, when oil and gas are taken out of the equation. America accounted for 16 per cent of the value of Scotland’s exports in the year to September 2023.

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It is not likely to be immune to any future more widespread tax policies.

Donald Trump says he will implement the tariff 'on day one'Donald Trump says he will implement the tariff 'on day one'
Donald Trump says he will implement the tariff 'on day one' | Getty Images

US trade accounts for almost a fifth of Scotland’s drinks exports, with drinks making up over a quarter of Scotland’s total goods exports to America. Despite the US historically becoming Scotch whisky’s first £1 billion market, Scotland’s national drink has already been subject to high duties in the US, following a period of a 25 per cent levy implemented under the previous Trump administration over an aerospace wrangle - one of a number of tariffs imposed during his first term of office.

A suspension of the whisky levy is in place, but is due to expire in 2026, something the Scotch Whisky Association warned could make it “once again collateral damage in a trade war not of its making”. This warnings came even well before Mr Trump’s presidency was a certainty.

Although a whisky was named after him to mark the opening of his Aberdeenshire Trump International Golf Links resort in 2012, Mr Trump is a tee-totaller and, as a result, not a fan of Scotland’s national drink. Indeed, he apparently has little sentimental attachment to Scottish goods, despite his Lewis heritage. Irn-Bru has also previously sparked Mr Trump’s wrath, when he banned it from his Turnberry resort over its apparent carpet-staining properties. The incoming president has pointedly eschewed Scotland’s national dress, when he was pictured at US-based luxury Scottish fashion show, ‘Dressed to Kilt’, in a lounge suit.

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As a nation, Scotland is not as economically exposed as either Canada or Mexico, which export 80 and 75 per cent respectively of their goods destined for foreign countries to the US. China has already hit back at the announcement, rebutting the claims.

Yet the impact of the threat alone could affect international negotiations before Mr Trump even arrives at the White House.

In Westminster, rumours have already begun the UK could target US brands, including Levi’s and Estee Lauder, in a resurrection of previous EU-wide tariff packages - if Britain’s trade with the US is impacted by future announcements.

Liberal Democrat EU spokesman James MacCleary warned MPs the levies on Canada, China and Mexico “raise serious concerns about [Trump’s] willingness to honour the US-UK relationship”.

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Mr Trump’s soon-to-be treasury secretary, Scott Bessent, previously suggested his future president’s intentions are to take an upper hand in any international negotiations.

“My general view is that at the end of the day, he's a free trader," he said in an interview before he was nominated for the Treasury role. “It’s escalate to de-escalate.”

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