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Sir Keir Starmer has told business leaders that he would double efforts to secure a trade agreement with the US after early negotiations failed to stop President Donald Trump by hitting a 10 percent fee in all British exports.
There are serious concerns in Downing Street about the impact on the United Kingdom economy of a global trade, as well as hit on British car and steel exporters that will face a 25 percent fine.
“It is clear that it will have an economic impact from the decisions that the US has made both here and globally,” Starmer told business leaders on a morning Street Downing on Thursday. “But I want to be clear crystal: We’re prepared.”
There was a relief that Britain was subject to the lowest initial tariff imposed by Trump on Wednesday, which was half of the 20 percent tax on EU exports.
But tariffs are likely to cost thousands of jobs across the UK, and eat in the financial head room set aside by Chancellor Rachel Reeves to hit its fiscal rules.
If the United Kingdom economy has been overthrown by the trade war, the chancellor may be forced to raise taxes or reduce government spending to hit its fiscal rules later during the year.
The Association of Producers makes the UK described taxes as “destructive” for the British industry.
Stephen Phipson, the chief executive of Make UK, said: “US President’s announcement of 10 percent of the UK goods exported to the United States and 25 percent of British -made vehicles, steel and aluminum is devastating for the United Kingdom.”
The fact that Trump has given Britain a more favorable tariff rate than what he decided in the EU can create tensions with Brussels at a time when Starmer is trying to “restore” relations after Brexit.
Starmer also faces a political danger if he is perceived to refuse to stand against Trump, when allies such as the EU and Canada are fighting with revenge tariffs.
For now, Starmer’s advantage is to try to complete a trade agreement with the US, with ministers saying their final goal is to remove the 10 percent US total fee for British goods, and 25 percent of automatic and steel products tax.
Jonathan Reynolds, Secretary of Business and Trade, will update MPs for British response on Thursday. He told the BBC: “It is important that no one is in a better position than the UK, but I am disappointed with everything that makes our trade position more difficult.”
The 10 percent initial tariff was applied to many other countries as well and mainly reflected Britain’s balanced trading relationship with US, than recent trade talks.
However, Downing Street claimed on Wednesday that the prime minister’s patient’s diplomacy with Trump had saved thousands of jobs.
An official of number 10 said Wednesday: “We do not want any fees at all, but a lower tax than others repeals our access. This matters because the difference between 10 percent and 20 percent is thousands of jobs.”
A sketch leaf for a US-UK trading deal that is on the table in Washington includes Britain’s offer to dilute or remove its digital services tax and a reduction in some meat and sea tariffs. The deal has not yet been signed by Trump.
Lord Peter Mandelson, the British ambassador to the US, is also pursuing a parallel path aimed at securing a technological agreement with Washington that will include closer cooperation in areas such as artificial intelligence and space.
Starmer, who is facing criticism of a lot of terrain ceding for US – including powerful technology companies – said: “I want to be clear. I will only make a deal if it is in national interest.”
Reynolds has talked to industries in the fire line from Trump’s tariffs – including sectors such as steel and automobiles – and most UK business executives have told him that concentration should be in finding a trade agreement to reduce taxes.
Liberal leader Sir Ed Davey called on Starmer on Wednesday to work with the EU, Canada and other partners in forming a “ready -made economic coalition” to take over the US president.
Reeves has warned MPs to even receive a special agreement on American tariffs “does not mean somehow we are outside the forest and not affected by tariffs.”
Shadowing business secretary Andrew Griffith said Thursday: “The silver lining is that Brexit – which labor ministers voted against 48 times – means we face much lower tariffs than the EU.”
The EU perspective that imposes revenge tariffs on the US but the United Kingdom refuses to do so to cast another problem for Starmer: Fallout for Northern Ireland and its sensitive resolution after Brexit.
The region, which has remained in the EU’s only market for goods under a commercial agreement after Brexit, is also part of the UK customs territory and is subject to a complex network of trading rules.
