Sir Keir Starmer is “very happy” about Britain’s treatment by the US on tariffs, Donald Trump has insisted, despite slapping the UK with a 10 per cent “reciprocal” levy on Wednesday.
“We have a very good dialogue. I think he was very happy about how we treated them with tariffs”, the president claimed while speaking to reporters on board Air Force 1.
Mr Trump also said: “I think it's going very well,” adding that the “markets are going to boom”.
But just hours later, UK foreign secretary David Lammy said he regrets America’s “return to protectionism”, warning that people across the country are “very concerned” about how the move to slap import taxes on goods would hit their own finances.
It comes after global markets tumbled and British ministers began preparing for retaliatory action as a result of the sweeping global tariffs unveiled by the US president on Wednesday. Meanwhile, the chancellor’s fiscal headroom risks being wiped out as a result of the levy.
The FTSE 100 fell to a three-month low on Thursday after the news that UK exports to the US would face a blanket 10 per cent tariff, while business secretary Jonathan Reynolds on Thursday said ministers will look at taking possible retaliatory action.
Although the prime minister has appealed for calm, UK officials are now working through 417 pages of products they could target in a list that includes everything from bourbon whiskey to motorbikes.
Treasury minister James Murray said the UK was “disappointed” that Donald Trump decided to impose tariffs, when asked if the US president was right to say Britain was “very happy” with its treatment.
He said the UK was in a “better position” than other countries because it is on the lowest band of tariffs but would keep all options on the table.
“The prime minister set out his reaction yesterday when he met businesses,” Mr Murray told Times Radio when asked whether Mr Trump was right. “We’re disappointed at tariffs being imposed globally.”
Asked whether it was time for the UK to stand up to Mr Trump, UK foreign secretary David Lammy told reporters: “We are a nation that believes in open trade, and I regret the return to protectionism in the United States, something that we’ve not seen for nearly a century”.
Speaking after a meeting with Nato counterparts in Brussels, he added: “We have been absolutely clear that all options are on the table as we ensure the national interests of the British people, who will be very concerned at this time about how this affects the bottom line for them and their economic welfare.
“We will put their national interest first, and it’s in their national interests to be negotiating with the United States an economic agreement at this time, but keeping all options on the table.”
Despite the UK being assigned the lowest tariff rate by Mr Trump, economists stressed that Britain still faced a “significant impact”, while the prime minister acknowledged there “will be an economic impact”.
Experts predicted that UK economic growth – already expected to amount to just 1 per cent this year – could be up to 0.5 percentage points lower than expected over coming years as a result of the tariffs.
Last week, the Office for Budget Responsibility warned that Ms Reeves’s headroom against her debt target would be at serious risk if tariffs were imposed. If this proves to be correct, the chancellor will face the prospect of imposing more spending cuts or tax rises if she does not change her fiscal rules.
Speaking at the launch of his local government campaign in Chesterfield, Sir Keir said the world is at the beginning of a “new economic era”.
“We have to act and lead differently”, the prime minister said, describing the response to President Trump’s tariffs as “not just a short-term tactical exercise”.
Asked by The Independent whether he could rule out further benefit cuts to fill any hole in the public finances left by Mr Trump’s trade war, the prime minister said the Budget was a long way away.
He said: “There’s a lot of water that will have to go under the bridge before then. Obviously, my job, our job, the government’s job, is to take the steps necessary in our national interest, which is why we’re focusing on progressing the deal that we’ve been discussing with the US, making sure that we are in a position to take other measures, should they be necessary, but at the same time continuing and turbocharging the work we’re doing on growth and reform and changing our economy.
“I’m not going to get into what may or may not happen in six months’ time.”
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