The world is braced for Donald Trump’s so-called “liberation day” tariffs, which could spark a global trade war.
The US president is expected to slap import taxes on goods going to the US from around the world in a White House statement at 9pm.
The tariffs have the potential to derail the UK government’s hopes for economic growth and have already rattled global stock markets.
Trump says the barrage of “reciprocal” tariffs will boost US manufacturing and punish other countries for what he has said are years of unfair trade practices.
But by most economists’ assessments, the move threatens to plunge the economy into a downturn and damage decades-old alliances.
Speaking at Prime Minister’s Questions on Wednesday, Prime Minister Keir Starmer said the UK government has “prepared for all eventualities” and “will rule nothing out”.
“A trade war is in nobody’s interests and the country deserves – and we will take – a calm, pragmatic approach,” he added.
But Chancellor Rachel Reeves admitted the UK could still be hit by the impact of Trump’s tariffs even if a quick deal can be struck.
She said the UK would not be “out of the woods” because of the economic storm the president’s measures will unleash.
The tariffs are expected to follow similar recent announcements of 25% taxes on car imports, levies against China, Canada and Mexico, and expanded trade penalties on steel and aluminium.
Trump has also imposed tariffs on countries that import oil from Venezuela and he plans separate import taxes on pharmaceutical drugs, lumber, copper and computer chips.
The tax on car imports to the US could cost an estimated 25,000 jobs in the UK, while the imposition of wider tariffs will make a range of British goods more expensive in the US, which is likely to reduce demand.
The UK could also become a destination for imports diverted from the US due to the high cost, potentially flooding the market and hitting domestic producers.
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% levy on the revenues of several major US tech companies – in exchange for a carve-out from the tariffs.
Starmer 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.
White House press secretary Karoline Leavitt said the new tariffs would take effect immediately, telling reporters: “April 2 2025 will go down as one of the most important days in modern American history.”
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