The government will continue to push for a deal to avoid a “trade war” after US President Donald Trump imposed new tariffs around the world, according to the UK business secretary.
Trump announced new tariffs on imported goods, including 10% on all UK imports and 20% on those from the European Union.
The UK has spent weeks negotiating a trade agreement with the US to avoid the full impact of the tariffs imposed on countries such as Canada and China.
A Downing Street source stated that the UK’s lower tariff “justifies” the government’s plans because “the difference between 10% and 20% is thousands of jobs.”
In response to the new tariffs, Business Secretary Jonathan Reynolds stated that the government remains “fully focused on negotiating an economic deal with the United States that strengthens our existing fair and balanced trading relationship.”
“We have a variety of tools at our disposal and will not hesitate to act,” he stated.
Nobody wants a trade war, and we are still working toward a consensus. However, nothing is off the table, and the government will take any steps necessary to protect the United Kingdom’s national interests. The US plan, which Trump claimed was retaliation for unfair trade practices, imposes a baseline tariff of at least 10% on all imports, with goods from nations deemed the “worst offenders” subject to much higher rates.
His decision contradicts decades of American policy that has embraced free trade, and analysts predict that it will result in higher prices and slower growth in the United States and elsewhere.
According to the government’s official forecaster, a worst-case trade war could reduce UK economic growth by 1% and eliminate the £9.9 billion in economic headroom that Chancellor Rachel Reeves gave herself in last week’s Spring Statement.
A Downing Street source told the BBC, “We do not want any tariffs at all, but a lower levy than others validates our approach. It is significant because the difference between 10% and 20% represents thousands of jobs.
“We will continue to negotiate while remaining cool and calm. We want to negotiate a long-term trade agreement while also lowering tariffs. We will continue working on that tomorrow.”
On Thursday, the government will hold a series of meetings with affected businesses to offer assistance and plan a response.
Reynolds previously claimed that following weeks of talks between government officials and the Trump administration, the UK was in the “best possible position of any country” to have tariffs reversed.
As part of the continued diplomatic efforts to come to a consensus, UK ambassador Lord Mandelson has met in the White House with vice president JD Vance and the president’s chief of staff, Susie Wiles.
Prime Minister Sir Keir Starmer reiterated the UK’s stance against Trump’s previous steel and aluminum tariffs, saying that the country will not “jump into a trade war” with retaliatory tariffs for the time being. Within. Economists have warned that the tariffs could hurt the UK economy and raise living expenses, so Sir Keir told his cabinet this week that he was “keeping all options on the table” in response.
Government officials hope that Wednesday’s announcement can be negotiated down to a “ceiling” rather than the final price.
Some early responses from the UK business community have supported the government’s approach. The government “has rightfully tried to negotiate a carve-out,” according to the Confederation of British Industry (CBI), and companies require a “measured and proportionate approach.”
In a statement, CBI CEO Rain Newton-Smith said, “Business has made it clear that there are no winners in a trade war.
“The announcements made today are extremely concerning for businesses and will have a big impact globally.”
However, Andrew Griffith, the shadow trade secretary for the Conservatives, charged that Labour was “failing to negotiate with President Trump’s team” in a timely manner.
“Unfortunately, British companies and employees will bear the consequences of Labour’s failure,” he stated.
“The bright side is that we will have far lower tariffs than the EU as a result of Brexit, which Labour ministers voted against no less than 48 times. This Brexit dividend will have safeguarded thousands of British jobs and businesses.”
The Liberal Democrats, on the other hand, called on the government to develop a “coalition of the willing against Trump’s tariffs” with other nations and to use “retaliatory tariffs where necessary.”
“We must put a stop to this trade war as soon as possible, and that means standing firm with our allies against Trump’s attempts to divide and rule,” the party declared.
Government sources say that although negotiations on an economic agreement with the US administration have advanced well, Trump’s public remarks have caused them to stall.
Various statements made by Trump regarding his tariffs are alleged to have deviated from his negotiating team’s prior understanding of his stance.
The agreement would cover aspects of trade in goods and services, agriculture—a contentious topic in earlier failed US-UK trade talks—and technology, in addition to lowering tariffs.
As part of an agreement to reverse US tariffs, Chancellor Rachel Reeves has proposed that the UK alter its taxes on large tech companies.
The digital services tax, which went into effect in 2020, imposes a 2% levy on tech firms, including large US firms like Amazon, and generates approximately £800 million in tax revenue each year.
The UK automotive industry, which was also hit with an additional 25% tax on all car imports to the US announced this week, described the tariffs as “deeply disappointing.”
Mike Hawes, CEO of the Society of Motor Manufacturers and Traders, warned that “costs cannot be absorbed by manufacturers” and described the US announcement as “yet another challenge to a sector already facing multiple headwinds.”
