UK to keep pushing for deal after Trump imposes 10% tariff

BBC News

02-04-2025

The government will keep pushing for a deal to avoid a "trade war" after US President Donald Trump imposed new tariffs globally, the UK business secretary has said.Trump announced fresh levies on goods coming into his country including 10% on all UK imports and 20% on those from the European Union.The UK has spent weeks working on a trade deal with the US to avoid the full impact of the level of tariffs introduced on countries such as Canada and China.A Downing Street source said the UK's lower tariff "vindicates" the government's plans, because "the difference between 10% and 20% is thousands of jobs".
Responding to the new tariffs, Business Secretary Jonathan Reynolds said the government remained "fully focused on negotiating an economic deal with the US that strengthens our existing fair and balanced trading relationship"."We have a range of tools at our disposal and we will not hesitate to act," he said."Nobody wants a trade war and our intention remains to secure a deal. But nothing is off the table and the government will do everything necessary to defend the UK's national interest."
The US plan sets a baseline tariff on all imports of at least 10%, with items from countries that the White House described as the "worst offenders" facing far higher rates for what Trump said was payback for unfair trade policies.His move breaks with decades of American policy embracing free trade, and analysts said it was likely to lead to higher prices in the US and slower growth in the US and around the world.A Downing Street source told the BBC: "We don't want any tariffs at all, but a lower levy than others vindicates our approach. It matters because the difference between 10% and 20% is thousands of jobs."We will keep negotiating, keep cool and keep calm. We want to negotiate a sustainable trade deal, and of course to get tariffs lowered. Tomorrow we will continue with that work."Reynolds has previously said weeks of talks between government officials and the Trump administration meant the UK was in the "best possible position of any country" to have tariffs reversed.Diplomatic efforts are still ongoing, and as part of the efforts to get a deal, Lord Mandelson, the UK ambassador, has had meetings in the White House with JD Vance, the vice-president, and Susie Wiles, the president's chief of staff.At 10% the tariff will still bite into the UK economy, but it is considerably softer than those on some other major economies, including the 34% placed on China and 26% on India.For the moment, the UK says it will not be "jumping into a trade war" with retaliatory tariffs Prime Minister Sir Keir Starmer said - a repeat of the response to Trump's earlier tariffs on steel and aluminium.Sir Keir told his cabinet this week he was "keeping all options on the table" to respond to the tariffs, which economists have warned could damage the UK economy and increase the cost of living.Inside government officials hope that Wednesday's announcement sets a "ceiling" on negotiations, not the final price, and can be talked down.The government's approach has been backed in some of the early responses from the UK business sector.The Confederation of British Industry (CBI) has said the government "has rightfully tried to negotiate a carveout" and businesses need a "measured and proportionate approach".Rain Newton-Smith, chief executive of the CBI said in a statement: "Business has been clear: there are no winners in a trade war. "Today's announcements are deeply troubling for businesses and will have significant ramifications around the world."
But Conservative shadow trade secretary Andrew Griffith accused Labour of "failing to negotiate with President Trump's team" in time."Sadly, it is British businesses and workers who will pay the price for Labour's failure," he said."The silver lining is that Brexit - which Labour ministers voted against no less than 48 times - means that we face far lower tariffs than the EU: a Brexit dividend that will have protected thousands of British jobs and businesses."
Government sources believe talks with the US administration on an economic deal have made good progress, but have been derailed by Trump's public comments.At different times, statements by Trump about his tariffs are said to have differed from what his negotiating team had previously understood his position to be.The deal would be broader than just reducing tariffs, focusing on technology but also covering elements of trade in goods and services as well as agriculture - a controversial area in previous unsuccessful US-UK trade talks.
Chancellor Rachel Reeves has suggested the UK could change its taxes on big tech firms as part of a deal to overturn US tariffs.The digital services tax, introduced in 2020, imposes a 2% levy on tech firms, including big US firms such as Amazon, bringing in about £800m in tax per year.The independent Office for Budget Responsibility (OBR) has warned tariffs could wipe billions off economic growth and all but eliminate Reeves's £9.9bn buffer against her self-imposed rules on spending and borrowing.