UK Braces for US Tariffs Amid Uncertain Trade Talks
The United Kingdom is set to face new US tariffs starting Wednesday, with Downing Street indicating that a deal to exempt British goods is unlikely to be reached in time.
US President Donald Trump has announced plans to impose a new wave of tariffs—on top of the previously declared 25% levy on cars and car parts—beginning 2 April. Over the weekend, Trump suggested these tariffs would apply to all countries, not just those with significant trade imbalances with the US.
UK Response and Potential Retaliation
A spokesperson for the prime minister stated that discussions on a trade deal to prevent tariffs had been “constructive,” but did not rule out retaliatory measures if the UK were targeted.
“The prime minister has been clear that he will always act in the national interest, and we have been preparing for all possible outcomes ahead of President Trump’s announcement,” the spokesperson said. “We are engaged in constructive discussions on a US-UK economic prosperity deal, but we will only agree to terms that benefit the British people.”
When asked whether a resolution could be reached by Wednesday, the spokesperson acknowledged that discussions would likely extend beyond that date. The UK government intends to take a “calm and pragmatic approach” in response to any tariffs, emphasizing that a trade war with the US would be counterproductive. However, he added, “We rule nothing out in response.”
Political Reactions
Conservative Shadow Trade Secretary Andrew Griffith MP criticized the government’s handling of the situation, calling the potential tariffs “a hammer blow” to British businesses and workers. He accused the prime minister of failing to secure a meaningful trade deal with the US.
Liberal Democrat leader Sir Ed Davey urged the government to impose retaliatory tariffs, following the example of Canada and the European Union. “Just asking nicely clearly doesn’t work with Trump,” he said. “We must stand firm with our allies and demonstrate that we will not be bullied. That includes being prepared to impose reciprocal tariffs if necessary, such as on Tesla vehicles, and negotiating a better trade deal with the EU to ensure alternatives.”
The developments come after Prime Minister Sir Keir Starmer spoke with Trump via phone on Sunday. Downing Street described the conversation as “productive negotiations” regarding an economic agreement.
Economic Impact
The UK government has maintained that its trading relationship with the US is relatively balanced compared to other nations. However, the independent Office for Budget Responsibility (OBR) has warned that a trade war could have severe economic consequences. The OBR projects that if the UK retaliates with its own tariffs, GDP could shrink by 0.6% this year and 1% next year. If the UK refrains from retaliation, the expected economic impact would be slightly lower, with GDP forecasted to contract by 0.4% this year and 0.6% next year.
Uncertainty remains over how the UK might respond to the tariffs if they are enforced. Possible countermeasures include duties on industries where British exports play a critical role in the US market, or targeted levies on specific products such as Harley Davidson motorcycles.
The UK exports approximately £7.6 billion worth of cars annually, with the US being its second-largest market after the European Union, according to the Society of Motor Manufacturers and Traders (SMMT). The tariffs are expected to hit British luxury car manufacturers such as Rolls-Royce and Aston Martin particularly hard.
Trump’s Trade Strategy
President Trump argues that his tariff measures will boost American manufacturing and protect domestic jobs, despite warnings that they could increase costs for US consumers. During a meeting at the White House last month, Trump hinted at a “real trade deal” that could potentially shield the UK from the tariffs he is imposing on other nations.
Analysis: The Uncertain Impact of Tariffs on the UK
The full impact of US tariffs on British goods remains uncertain. The severity will depend on the scale of tariffs applied and how businesses and consumers respond.
For industries like car manufacturing, tariffs are a major concern. Exporters may absorb some costs in the supply chain, pass the price hikes to American consumers, or take a direct hit to their profit margins. In the worst-case scenario, they could lose sales entirely.
The effect on UK prices is also unpredictable. If the UK retaliates with tariffs on American products, British consumers could see price increases. However, global trade shifts—such as an influx of Chinese goods into the UK due to US restrictions—might push prices down in some sectors.
Broadly speaking, US tariffs would harm UK economic growth. Without retaliatory measures, the OBR estimates that GDP would contract by 0.6% next year—significant but not catastrophic. However, this projection is based on various assumptions, and considerable uncertainties remain regarding both policy implementation and its ripple effects.
With high stakes on both sides, the coming days will be crucial in determining whether an agreement can be reached or if a trade conflict between the UK and the US is inevitable.
