Donald Trump is minutes away from unveiling his ‘Liberation Day’ tariffs tonight as Britain braces for a battering.
The US president is expected to confirm the UK will not escape the pain of levies on allies and foes alike, which he claims will restore ‘fairness’ in global trade.
Keir Starmer has already acknowledged that his desperate efforts to secure an exemption have been snubbed.
Billions of pounds of exports to America by businesses are potentially affected, with fears thousands of jobs are on the line. The measures are deeply divisive in the US, with condemnation from Democrats who argue they will only drive inflation, and near-panic on stock markets.
Mr Trump appears to have deliberately waited until markets were closed to make his announcement.
The PM is set to hold off any ‘knee jerk’ retaliation as he still hopes to strike a wider trade deal in the coming weeks.
However, there are fears of a full-blown global trade war – with the EU, China and other major powers considering their options.
Chancellor Rachel Reeves acknowledged this afternoon that the UK will not be ‘out of the woods’ even if it can get exemptions.
Donald Trump is expected to confirm that the UK will not escape the pain of levies he claims will restore ‘fairness’ in global trade
Keir Starmer has already acknowledged that his desperate efforts to secure an exemption have been snubbed
The president is holding an event titled ‘Make America Wealthy Again’
She said the main impact on the economy would be from ‘global tariffs’ rather than UK-specific ones, thanks to depressed demand and higher inflation in other countries.
She said: ‘I think that’s really important to understand, because even if we are able to secure an economic deal with the United States – which we very much want to secure and are working hard to secure that – even if that’s possible, (it) doesn’t mean somehow that we are out of the woods and not impacted by tariffs.
‘So we don’t just want to see an agreement between the UK and the US, we want to see free trade, fair trade continue.’
Ms Reeves insisting the Government would not be ‘posturing’ in search of a ‘quick headline’.
The Chancellor – whose Spring Statement spending plans are already at threat of being torched – said she had been talking to UK exporters who urged against a rushed response.
Ms Reeves told the Commons Treasury Committee: ‘We don’t want to be posturing here, the prize on offer is a good economic agreement between us and the United States’.
‘We are not going to do anything to put that in jeopardy, we are not going to rush into action to get a quick headline.’
At PMQs, Sir Keir said the Government has ‘prepared for all eventualities’ and is working with companies likely to be hit by the tariffs.
He told MPs: ‘A trade war is in nobody’s interests and the country deserves – and we will take – a calm, pragmatic approach.
‘That’s why constructive talks are progressing to agree a wider economic prosperity deal with the US.
‘That’s why we’re working with all industries and sectors likely to be impacted.
‘Our decisions will always be guided by our national interest, and that’s why we have prepared for all eventualities, and we will rule nothing out.’
The car industry has already learned its fate, with a 25 per cent tariff on vehicles sent to the US – something which could cost an estimated 25,000 jobs in the UK.
The imposition of wider tariffs will make a range off British goods more expensive in the US, which is likely to reduce demand.
The UK could also becomes a destination for imports diverted from the US due to the high cost, potentially flooding the market and hitting domestic producers.
Economists at the Office for Budget Responsibility have warned that US tariffs could eliminate Ms Reeves’s ‘headroom’ against her day-to-day spending plans, requiring her to make more cuts or hike taxes to meet the rules she has set herself.
The tariffs could knock up to 1 per cent off the size of the UK economy if there is a full-blown trade war with the UK retaliating to Mr Trump’s measures.
Chancellor Rachel Reeves acknowledged this afternoon that the UK will not be ‘out of the woods’ even if it can get exemptions
Analysis from the Institute for Public Policy Research (IPPR) suggested tariffs on car imports would put 25,000 UK jobs at risk and ‘completely destabilise the UK car manufacturing industry’.
UK negotiators are pursuing an economic agreement with the US focused on technology.
Such a deal could include possible changes to the digital services tax – which imposes a 2 per cent levy on the revenues of several major US tech companies – in exchange for a carve-out from the tariffs.
Sir Keir did not deny that changes to the digital services tax are being considered.
Easing access for US agricultural products to UK markets could also be on the table, although officials have insisted that food standards will not be lowered.
