British Prime Minister Keir Starmer expects the UK to be hit by more tariffs when Donald Trump announces his latest round of tariffs on Wednesday. Downing Street also said it “reserves the right” to respond to protect the UK’s national interest.
The president had announced 25% levies on cars, steel and aluminum imports, and is expected to impose further tariffs on countries with which the U.S. has a trade imbalance or those he regards as imposing unfair taxes or regulation.
The U.S. government has singled out VAT as an example of an unfair tax, but Downing Street has rejected the characterization. UK ministers have also been pressured to drop the 2% digital services tax which hits big U.S. tech firms such as Meta, Google, and Amazon.
UK ministers prepare for Trump tariffs on Wednesday
Downing Street revealed that it expects the UK to be hit by more tariffs when Donald Trump establishes his trade barriers on April 2. British Prime Minister Keir Starmer said that the UK “reserves the right” to respond to the tariffs to protect national interest.
UK ministers are expecting the nation to be hit by tariffs that will apply to all countries as part of the U.S. president’s “liberation day.” UK’s hopes for a deal before Wednesday are also fading as the former top UK trade negotiator Crawford Falconer warned Keir Starmer’s plan for an “economic prosperity deal” with the U.S. could take as long as a year to come to fruition.
Falconer argued that the UK got a year at most for a deal, but “Trump and the government will say no, we can do this quicker,” and they can get the deal done in a matter of months as opposed to years.
Starmer maintained that officials will continue talks with the U.S. “as long as there’s a chance to reach a deal.” The Office for Budget Responsibility (OBR) noted that if the U.S. imposed a reciprocal 20% increase in tariffs on all trade partners, the UK’s economy would be 1% smaller than its central forecast in the peak year of impact in 2026 to 2027. The OBR argued that in that scenario, it would wipe out all of the government’s fiscal buffer as additional tariff revenue was more than offset by lower receipts from income, corporation, and consumption taxes.
Starmer’s official spokesman Dave Pares said the UK has been actively preparing for all eventualities ahead of the expected announcements from President Trump this week. Pares also expects the UK to be impacted alongside other countries.
“Our trade teams are continuing to have constructive discussions to agree a UK-U.S. economic prosperity deal, but we will only do a deal which reflects this government’s mandate to deliver economic stability for the British.”
-Dave Pares, British Prime Minister’s spokesperson.
Stock markets plummeted on Monday in their worst month in two years after Donald Trump acknowledged that the new tariffs he is expected to announce tomorrow would hit “all countries.” The president told reporters on Air Force One that “you’d start with all countries. Essentially all of the countries that we’re talking about.”
UK ministers expect a hit on Trump’s tariffs
United Kingdom ministers have been engaged in intense negotiations in recent weeks with the U.S., but are now resigned to being hit with whatever Trump announces on April 2. Government sources have maintained they did not recognize the timelines suggested by Falconer.
The country’s ministers argued there was deep uncertainty around what the U.S. President planned, including within his own administration. They also acknowledged they are taking a “cool-headed” approach and are prepared for multiple scenarios.
Pares also mentioned that the UK has been clear that a trade war with the U.S. was not in the national interest, but the nation will reserve the right to respond in a way that does protect British industry once details are viewed. He added “that’s why we’re preparing for all eventualities. It’s why we’ve said that we rule nothing out.”
Falconer, who was the government’s most senior trade official until the end of last year, noted that failure to avoid new tariffs on Wednesday would hurt the UK economy, but he backed Starmer’s plan to seek a wider deal. The former top UK trade negotiator believes it will be damaging to some people if tariffs are applied, particularly exports, autos and steel. He also argued that it’s not going to shift the United Kingdom economy overnight, “God knows we survived Brexit, which is far bigger than this is going to be.”
The official, who led the UK’s attempts to reach a comprehensive U.S. free trade deal during Trump’s first term, also added that Labor could face mounting pressure to retaliate. He said that “the government needs to be careful that mood doesn’t shift, and if Europe moves, they might get under some pressure.”
The former British ambassador to the U.S. Kim Darrock noted that UK ministers need to be wary of giving Trump wins. He argued that tariffs are Trump’s all-purpose forcing mechanism and he’ll use them again if he sees them working.
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