The UK should not “jump in with both feet” to retaliate against Donald Trump’s trade tariffs, Sir Keir Starmer has said.
The Prime Minister told a group of senior MPs that he was not open to “trading away” the NHS as part of an economic agreement with the US designed to stave off the impact of import taxes.
Sir Keir was also “very clear” that a digital tax on big tech firms should remain in place, as reports suggested abolishing the levy has been raised during negotiations with the US.
The Prime Minister’s call for a calm approach to US tariffs came as a sense of optimism returned to the financial markets after several days of heavy losses.
London’s FTSE 100 index was up 2.71%, or 208.45 points, on 7,910.53 at the close of trading.
In the US, the Dow Jones index and the S&P 500 also made gains while Asian markets rebounded following steep falls in previous days.
Speaking to the Liaison Committee on Tuesday – the last day before MPs’ Easter recess – the Prime Minister continued to call for calm heads.
“My instinct is that we shouldn’t jump in with both feet to retaliate. So in that sense, I’m not changing my plans,” Sir Keir said.
“Obviously we have to keep our options on the table and do the preparatory work for retaliation if necessary. But I think that trying to negotiate an arrangement which mitigates the tariffs is better.”
The tariffs are not a “temporary passing phase” but part of a “changing world order”, the Prime Minister added.
The next stage of US President Donald Trump’s tariffs programme comes into force in the early hours of Wednesday, with import taxes at 20% for goods from European Union nations and 24% from Japan.
The UK Government is pushing for a deal with the White House in the hope of easing the 10% tariff on US imports of British goods, along with a 25% tariff on cars and separate import taxes for steel and aluminium.
But Sir Keir has indicated he wants to protect the NHS from US commercial interests.
He told the committee: “I have been very protective of the approach we take to the NHS in any dealings with any other country because it is our greatest asset, and we are not trading it away.
“That is the approach that I take here.”
In response to reports that abolishing the 2% digital services tax on tech giants is on the table in negotiations with the US, Sir Keir said: “I’ve been very clear in my view that we need to have arrangements for a digital tax of some sort, and equally we need to be pioneers of free speech, which we have been for very many years in this country.”
US vice president JD Vance is among those who has criticised the Online Safety Act for its impact on freedom of speech.
But Sir Keir insisted the law was being used to “rightly protect” children, adding: “When it comes to dealing with paedophiles and protecting children, I take a pretty strong line that we take the necessary measures in order to do so.”
Meanwhile, Rachel Reeves told the Commons that the Government would support families and businesses in light of the tariffs, after a meeting of the Cabinet.
The Chancellor warned MPs tariffs “will continue to have huge implications for the world economy” but added that the Bank of England believes the UK banking system is “resilient”.
In a message to businesses and families worried they might be hit by the import tax, Ms Reeves insisted “we have your backs”, and said a trade war “is in nobody’s interest”.
The UK has not retaliated so far to the tariffs, but has drawn up a 417-page list of products which could be affected if Sir Keir decides to put import taxes on US goods.
The Centre for Cities think tank warned the impact of the import taxes will not be felt equally across the UK.
Towns and cities including Derby, Coventry and Telford are among those that will be worst hit, the think tank’s research has found, while London, York and Edinburgh will be least exposed.
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