Ministers have warned ‘no option is off the table’ for the UK to respond to tariffs which could be imposed by the US from Wednesday
Sir Keir Starmer is urging Donald Trump to avoid starting a global trade war as the world awaits the US President’s planned tariff regime.
Home Secretary Yvette Cooper warned on Sunday that imposing tariffs would be bad for the world economy and that “no option is off the table” for the UK to respond to any levies.
The Prime Minister agrees with Cooper’s warning and that “a trade war is in nobody’s interest,” a Downing Street source said.
Trump has already announced plans for 25 per cent tariffs on imports of cars, steel and aluminium to the US, a move which British motoring manufacturers have warned will be devastating for the UK.
The US President is set to announce more levies on Wednesday, which he is calling “liberation day”.
There was speculation that Starmer could speak by phone with Trump again before Wednesday, where he would likely push for the UK to spared from any tariffs regime.
The two men spoke last Sunday as part of negotiations on a trade deal between the US and UK. Discussions between British and US officials have intensified in recent days, although 2 April is not being seen as a deadline for the bilateral deal.
Asked by Sky News’s Sunday Morning With Trevor Phillips programme how damaging she thought the tariffs could be, the Home Secretary said: “In the end, if you increase barriers to trade right across the world, that’s not good for the world economy, let alone any individual country as part of that.
“So that’s why our approach to this has been to try and seek new trade agreements across the world, including improving our trading relationship with the EU as well as with the US.”
She said “no option is off the table”, when it comes to the UK Government responding to the tariffs and discussions with the US over exemptions from the levy are “intense”.
“We obviously can’t keep a running commentary on different discussions that are taking place, but we have to always make sure that we’re acting in the national interest.”
Trump said on Saturday he “couldn’t care less” if manufacturers were forced to put up prices due to the tariffs.
He told NBC News that if foreign carmakers raised prices it would mean “people are gonna buy American-made cars – we have plenty”.
Trump has threatened to impose blanket 25 per cent tariffs on goods from all countries that impose VAT on US exports, which include the UK and EU.
On Wednesday, the Office for Budget Responsibility warned that a 20 per cent increase in levies between the US and the rest of the world would cut UK growth by one per cent and “entirely eliminate” Rachel Reeves’s £9.9bn of fiscal headroom announced in her Spring Statement.
Sir Crawford Falconer, Britain’s trade chief until January this year, said the UK should “be prepared to negotiate” on the digital services tax.
Last week the Chancellor insisted the tax was “hugely important” but there is speculation that Starmer could scrap it or water it down to appease Trump, a supporter of US tech firms, in trade talks.
Falconer told Times Radio the UK should be “positive” that Trump has said he is still open to doing a deal with Britain.
He added: “The details of every single tariff line, ultimately you negotiate that at the end of the day. But there’s no reason why the United Kingdom could not, across the board, have liberalisation in goods and as much of services as is feasible with the United States.”
On the digital services tax Falconer said: “I think you actually have to be prepared to negotiate on it… We’re not the worst offender in terms of digital services taxes, but you have to look at what the economic benefits will be of investment and of the other parts of your economy.”
The former trade official also said there could be “tactical reasons” for the Starmer government to retaliate against tariffs.
“What you do is you negotiate, you test whether the other side are genuinely engaged. And if you make the judgement that they’re genuinely engaged as opposed to just playing a game, then you can take the decision tactically.
“If you’re making progress and the other side is showing that they’re showing their cards, then you probably shouldn’t [retaliate].
“But if they’re not, if they’re just shutting up shop, then of course it makes sense at a certain point to look like you’re an adult and you can take it and you can put in provisional tariffs.”