Sir Keir Starmer has vowed to remain 'cool and calm' after Donald Trump's tariffs (Image: Getty)
Britain is ready to strike back against the US unless a trade deal scrapping Donald Trump’s tariffs on UK goods is agreed within weeks. Prime Minister Sir Keir Starmer vowed to remain “cool and calm” after the US president announced fees of 10% would be levied on imports from the UK and insisted: “A trade war is bad for working people and bad for our businesses.”
But he also warned “nothing is off the table” as the Government launched a consultation asking businesses for their views on retaliatory tariffs, which could be charged on key US products such as Bourbon whiskey, motorcycles, guitars and jeans. The consultation is due to run until May 1 – and the threat of charges on US imports will be lifted if the White House agrees to a trade deal before then, Business Secretary Jonathan Reynolds confirmed.
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Announcing the consultation, Mr Reynolds said: “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 that, will be lifted.”
However, the Business Secretary insisted the May 1 date was not intended as a deadline while business leaders urged the Government to avoid tit-for-tat charges.
There was relief in Downing Street that Mr Trump had imposed smaller tariffs on the UK than on many other countries, with the EU hit by export fees of 20%. However Tories pointed out that Mr Trump also imposed tariffs of 10% on nations including the Congo, Costa Rica, and Kosovo, suggesting Britain’s diplomatic efforts, including the offer of a state visit hosted by the King, had made little difference.
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In addition, US tariffs of 25% on motor vehicles, steel and aluminium affect every country including the UK.
Speaking to business leaders in Downing Street, Sir Keir admitted: “Clearly, there will be an economic impact from the decisions the US has taken both here and globally.
“But I want to be crystal clear – we are prepared.”
He highlighted progress on a potential US-UK trade deal, which had initially focused on technology and artificial intelligence but now appears to have grown into a wide-ranging agreement that could mean US tariffs are reduced or eliminated.
Sir Keir insisted: “Nobody wins in a trade war. That is not in our national interest and we have a fair and balanced trade relationship with the US.
“Negotiations on an economic prosperity deal, one that strengthens our existing trading relationship – they continue, and we will fight for the best deal for Britain.
“Nonetheless, I do want to be clear I will only strike a deal if it is in the national interest and if it is the right thing to do for the security of working people.”
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The UK exported goods worth ￡58.1billion to the US in 2023. Cars were the top export and America is a major export market for British steel and aluminium products.
Other sectors that could be hit include alcoholic drinks, thanks to the popularity of scotch whisky in the US.
There is confusion over whether pharmaceutical firms will be spared, after a fact sheet produced by the White House suggested the sector could be exempt. UK exports of goods are dwarfed by service exports to the US, which were worth ￡124.4billion in 2023.
Mr Trump said the tariffs were “reciprocal” in response to levies imposed by other nations, but it is not clear how the 10% figure was arrived at.
The White House decision to impose a lower tariff on the UK compared to the European Union was declared a “vindication” of Brexit by Conservatives. Shadow Business Secretary Andrew Griffith claimed “thousands of British jobs” have been saved.
But he mocked suggestions that Sir Keir’s diplomacy had yielded results, saying: “We’re in precisely the same band as the Congo, Costa Rica, Kosovo and the Christmas Islands. In fact, I count over 125 countries and territories that have the same tariff levels from the US as we now do, so not that special.”
Mr Griffith said the White House announcement “was a vindication of those who were pilloried and abused for wanting our country to have the freedom to decide our own trade policy. If Labour and the Liberal Democrats had their way, we’d still be in the EU”.
Treasury watchdog the Office for Budget Responsibility had previously warned that US tariffs could damage the economy to such an extent that Chancellor Rachel Reeves would be forced to push up taxes or cut spending in her autumn Budget statement. But Barret Kupelian, chief economist at PwC, said: “The UK avoided a direct blow — but the global economy has taken a substantial hit.
“For the UK, the impact is significant — though less severe than for some other countries. In the short term, businesses face a sharp rise in uncertainty.”
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UK business leaders called on the Government to avoid further escalation. Rain Newton-Smith, chief executive of the Confederation of British Industry, said: “A cool and calm reaction from the UK Government is the right response. UK firms need a measured and proportionate approach which avoids further escalation.
“Retaliation will only add to supply chain disruption, slow down investment, and stoke volatility in prices.”
Downing Street has denied reports that it could water down the Online Harms Bill, which aims to stop children from accessing harmful content, after the US reportedly called for changes as part of a trade agreement.