Prime Minister Keir Starmer gathered business chiefs in No 10 for talks after Donald Trump announced sweeping global tariffs.
Starmer acknowledged there would be an economic hit to the UK from the 10% import tax slapped on British goods entering the US.
He indicated that he would fight for a trade deal with the US rather than immediately respond with retaliatory tariffs, although he stressed that “nothing is off the table”.
The US president unveiled tariffs on countries around the world, with the UK’s 10% rate putting them in the lowest “baseline” category, but the Prime Minister acknowledged British exporters would be hurt by the levy.
Within government there was an element of relief that Trump had not singled the UK out for more punitive measures – the European Union’s rate was 20%, Japan’s was 24% and Chinese goods arriving in the US will be hit with a 54% tariff.
Addressing senior executives from some of the UK’s biggest companies in Downing Street, Starmer said: “Clearly, there will be an economic impact from the decisions the US has taken both here and globally.”
He said that “nobody wins in a trade war” and stressed the UK had a “fair and balanced trade relationship with the US”.
Negotiations on an “economic prosperity deal” which it is hoped could mitigate the impact of the tariffs will continue, Starmer said as he promised to “fight for the best deal for Britain”.
But he said he would “only strike a deal if it is in the national interest and if it is the right thing to do for the security of working people”.
PA MediaStarmer said that “as with defence and security, so too for the economy and trade we are living in a changing world, entering a new era” and “we must rise to this challenge”.
The Government will act “with pragmatism, cool and calm heads, focused on our national security”, he vowed.
The UK exported £60.4 billion of goods to the US in 2023, around 15% of all goods exports.
While the blanket 10% tariff will come into effect on Saturday, the car industry has already been hit with a 25% import tax which began in the early hours of Thursday morning.
Luxury carmaker Bentley’s boss Frank-Steffen Walliser and Jaguar Land Rover’s chief financial officer Richard Molyneux were among the executives at the No 10 meeting.
The FTSE 100 Index dropped sharply on opening, falling 122.4 points or 1.4% in the first few minutes of trading.
European indices suffered steeper falls, with the Dax in Germany and the Cac 40 in France both down more than 2%, while markets across Asia slumped overnight, with the Nikkei in Japan down nearly 3% and China’s Hang Seng 1.5% lower.
PA MediaTrump said the tariffs were “reciprocal” in response to measures put in place by other countries who had “looted, pillaged, raped, plundered” the US economy.
It is not clear how the 10% tariff was arrived at for the UK, as the US measures are based not only on tariffs charged by countries but also non-tariff barriers to trade.
Trump highlighted the “exorbitant” rates of VAT as an example of a measure which hits US firms, even though the tax applies to purchases in the UK wherever the goods originated from.
Business Secretary Jonathan Reynolds said the average tariffs the UK has in place on US goods is “about 4%” but the US was “adding in other policy issues to that equation”.
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