The government has quietly abandoned plans to raise business rates on out-of-town distribution centres after officials concluded the move would hit US operators such as Amazon and provoke retaliation from Donald Trump, according to the head of the hospitality sector’s main trade body.
The White House veto
Allen Simpson, chief executive of UKHospitality, said ministers had been explicit in private conversations: the White House would view any levy that falls heavily on American online giants as a provocation. “That’s not contested. That’s just what the officials say,” Simpson told City AM. The calculation, he added, is that the UK cannot reform business rates without taxing those same companies, and it will not tax them because it fears a trade war.
A Treasury spokesperson declined to engage with the claim, saying decisions on tax are reserved for fiscal events and the department does not comment on rumour or speculation.
The precedent
The fear is not theoretical. During his previous term, Trump threatened 100 per cent tariffs in response to the UK’s digital services tax on US tech firms. That episode established a pattern: targeted levies on American platforms draw a direct threat of trade sanctions, and the current government appears determined not to repeat it.
The policy trap
Hospitality operators have argued for years that the rates system is distorted. Pubs and hotels occupy high-value premises in town centres and pay accordingly; vast warehouses on cheaper land pay a fraction per square metre despite generating enormous revenues. Simpson said the logical fix, assessing bills as a percentage of turnover, would require a dramatic increase on Amazon sites, which is precisely the outcome the Treasury wants to avoid.
Retail opposition aligned
The policy also faced resistance from traditional retailers. Jason Tarry, chair of John Lewis and Waitrose, argued the measure misunderstood how modern high streets operate, noting that many chains use out-of-town sites for storage and distribution. A tax on those facilities, he warned, would ultimately feed through to consumer prices.
The alternative on offer
In July, the Chancellor announced a 20 per cent business rates cut for pubs. At a UKHospitality event on Tuesday, business minister Kate Dearden said the government would focus on delivering more investment, jobs and sustainable growth across every part of the country. Simpson’s assessment suggests that, for now, the structural reform the sector wants remains blocked by geopolitics rather than economics.