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Sir Keir Starmer is braced for Donald Trump to hit Britain with new import taxes this week as part of his promised round of global reciprocal tariffs, in spite of “constructive” talks between the two leaders on Sunday.
Downing Street conceded that British efforts to avoid punitive tariffs had not yet yielded results and that it expected “the UK to be impacted alongside other countries”.
A spokesman for Starmer signalled that Britain would not immediately retaliate but would instead continue with a “calm and pragmatic approach” aimed at securing a new economic deal, covering tariffs.
The spokesman said the talks were “likely to continue beyond Wednesday”, adding: “We will continue to have these talks for as long as there’s a chance of a deal with the US.”
Starmer on Sunday held what Downing Street called “productive” trade negotiations with Trump, as he tries to put together “a UK/US economic prosperity deal”. The talks have been going on for several weeks and Downing Street said they would “continue at pace this week”.
Trump on Sunday told reporters the tariffs he is expected to announce on April 2 would apply globally. “You’d start with all countries, so let’s see what happens,” he said. The US president has dubbed Wednesday “liberation day”.
Asked whether Britain would hit back with its own tariffs, Starmer’s spokesman said the prime minister was “ruling nothing out” but that the emphasis was on talking and trying to secure a deal.
“A trade war with the US is not in anyone’s interest,” Starmer’s spokesman said. “British industry wants to see the British government continue a dialogue with the US.”
Starmer, who has had regular phone calls with Trump in recent weeks, has said that Britain will be “pragmatic and clear eyed” in its response if exports of UK-made cars and other goods are hit by US tariffs.
Lord Peter Mandelson, Britain’s ambassador to Washington, is seeking to engineer an economic deal that would lead to Britain being given a carve-out from Trump’s threatened reciprocal global tariffs.
British officials have spoken to the Trump team about scaling back or axing the UK’s digital services tax, which is set to raise £800mn this year and particularly affects big US tech companies.
But the UK car industry told Sarah Jones, industry minister, on Friday that it did not want to see immediate UK retaliation if Trump pressed ahead with his threat of 25 per cent tariffs on foreign-made cars entering the US.
“The industry does not want a trade war, but it’s important that we keep all options on the table,” Starmer said last week.
Carmakers have instead demanded that ministers develop a “holistic approach” to supporting the UK auto industry, including through lower energy costs, increased training and better regulation.
The independent Office for Budget Responsibility, the fiscal watchdog, has warned that Britain’s GDP will be 1 per cent lower next year in the event of the most “severe” global trade war.
That would almost eliminate UK chancellor Rachel Reeves’ £9.9bn of headroom against her fiscal rules, announced last week in the Spring Statement, and increase the likelihood that she would have to raise taxes in an autumn Budget.
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