Keir Starmer is considering retaliatory measures against the US after abandoning hopes the UK can avoid direct tariffs set to be unleashed by Donald Trump this week.
The prime minister has suggested he could follow the EU and Canada’s lead on retaliatory tariffs, vowing to “act in the national interest” and “leaving everything on the table”.
At the beginning of last week there had been optimism that the UK would avoid direct levies planned for the EU, China and Canada among others. And there was even a hope that the UK/US trade deal might still be completed in time for 2 April.
But a highly placed source admitted that once President Trump confirmed 25 per cent tariffs on imported vehicles last Wednesday, “negotiations became much harder” for the UK government.
Another source told The Independent: “After the business with cars, tariffs look inevitable now.”
It comes after Sir Keir’s attempts to woo the US president with a state visit and public praise of his attempts to bring peace in Ukraine appear to have failed to persuade Trump to exclude Britain from a trade war.
However, sources have told The Independent that the UK is still dangling the prospect of ditching the planned digital services tax if the Trump administration is ready to sign a new trade deal that could avoid tariffs.
The 2 per cent levy on tech companies would have raised £1bn but had provoked the ire of X owner and Trump ally Elon Musk, as well as Vice President JD Vance who clashed with Sir Keir on the issue in the Oval Office last month.
The US/UK deal is based largely around future technologies such as artificial intelligence and bioscience. While it is “not a traditional trade deal” – avoiding complicated agriculture issues, such as US chlorinated chicken, and manufacturing including car production – business secretary Jonathan Reynolds has been crisscrossing the Atlantic in a bid to get a deal done and attempt to talk the Americans out of imposing tariffs.
With 2 April being dubbed “World Tariff Day” because it is when President Trump is set to unleash tariffs around the globe, UK ministers are “now prepared for any eventuality”.
The US president is describing it as “Liberation Day” claiming it will rebalance America’s trading relations but a source close to the prime minister insisted that he was sticking to his line that “the UK and US have a fair and balanced relationship in which the US has a slight surplus”.
The Downing Street source noted: “We will continue to talk after 2 April but we are now actively preparing for all eventualities.
“The prime minister will act in the national interests and reserves the right to retaliation.”
The Treasury and Department for Business and Trade (DBT) have been wargaming different outcomes but one senior minister admitted that “the problem is [Trump] is completely unpredictable.”
