Sir Keir Starmer learnt of Britain’s fate along with the rest of the world. Such was the secrecy surrounding the announcement that nobody in No 10 knew exactly how the UK would be treated on President Trump’s “liberation day”.
The government had been given only a broad indication that it would end up at the lower end of the tariff spectrum. During talks Howard Lutnick, the US commerce secretary, intrigued his British counterparts by repeatedly pulling a printed spreadsheet from his pocket for reference.
That spreadsheet was turned into an enormous game show-style board held aloft by Trump during his White House news conference on Wednesday night detailing the tariffs that would hit every country.
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The board revealed that 10 per cent tariffs would be imposed on the UK, compared with the 20 per cent facing the European Union, a decision greeted with a degree of relief by No 10.
The prime minister watched Trump’s 46-minute speech in his Downing Street flat before holding a conference call with aides. He moved immediately on to the next steps: the need to get an economic deal over the line and to go “further and faster” in reshaping Britain’s economic policy.
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The initial message from No 10 was one that bordered on triumphalism. Starmer’s charm offensive on Trump, a source said, had been “vindicated”. In fact it subsequently emerged that the level of tariffs was based on an arbitrary, and remarkably simple, calculation: the level of the trade deficit for each country divided by the level of exports to the US.
It meant that the UK was in the same position as Brazil, a country that briefly banned Elon Musk’s social media platform X. Some of the decisions bordered on bizarre.
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Trump put a 10 per cent tariff on the Heard Island and McDonald Islands, an uninhabited Antarctic territory whose main inhabitants are penguins and seals. It is so remote that no people live there and appears to have been included on the list solely because it is technically an external territory of Australia, which was also hit with a 10 per cent tariff.
By the time Jonathan Reynolds, the business secretary, took to the airwaves, the government’s line was clearer. The UK, he said, was in a “relatively better” position than other countries but the government was disappointed by the imposition of tariffs. America, he said, remained a friend of Britain and “our principal ally”.
Starmer had a breakfast meeting with business leaders in No 10 and struck a similar tone. The UK, he said, would “fight” to secure a trade deal with the US in the hope of mitigating the impact of tariffs. Addressing Pascal Soriot, of AstraZeneca, Charles Woodburn, of BAE, Richard Molyneux, of Jaguar Land Rover, and others he said: “Nobody wins a trade war, that is not in our mutual interest. Negotiations on an economic prosperity deal — one that strengthens our existing trading relationships — they continue and we will fight for the best deal for Britain.”
There remains significant frustration in government that Trump refused to sign the trade deal before the tariffs announcement. Insiders said that the broad outlines of it were agreed: a light-touch approach to regulating artificial intelligence, lower tariffs for US agricultural imports and dropping a tax on Silicon Valley tech giants.
However, last week the US told the UK that it would not be signing it, leaving Starmer in the lurch. Talks have continued between Reynolds, Lutnick and Jamieson Greer, the US trade representative, with regular texts in recent days. The government hopes that the deal will be done by the end of the month, although there is no guarantee.
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The one thing the UK will not be doing, for now at least, is retaliating. While the EU is preparing to strike back with a barrage of tariffs, the UK believes that it is in the best position in the world to secure a deal. “The Americans need to show that they can do a deal with someone,” a senior government source said. “We fit that profile better than anyone.”
Starmer used the launch of Labour’s local election campaign at a pharmacy in Derbyshire to rule out tariffs while talks are ongoing. “We are acting in your absolute best interest,” he said. “A trade war is bad for working people and bad for our businesses, but I don’t think we should jump into a trade war. I think it’s better if we try to negotiate a better outcome and that’s what we are trying to do.”
Behind the scenes every business that has contacted the government has warned against imposing tariffs. Doing so would only serve to add to disruption, pushing up prices and leading to further supply chain issues. Nonetheless the government has decided it needs to consider all options.
Two days ago it informed the US that it would be consulting British businesses on which US imports could face tariffs. It published a 417-page list of 8,364 US products imported to the UK that could be subject to “a tariff response”. The list was extraordinary in both scale and variety. It includes golf clubs, motorcycles, machine tools, yachts, frozen goat meat, sculptures, record players, rollercoasters and even live bees.
In the Commons Reynolds struck an upbeat tone. He said there was “hope and optimism” about trade negotiations with the US, insisting that “there is no country in the world further advanced in the talks they are having with the US”.
He said: “I believe we could seriously get to a position where we’re not only avoiding the imposition of additional trade tariffs and barriers, we could be deepening our trade relationship and removing some of the barriers that already exist, particularly in trade in services.” A deal was “not just possible, it is favourable to both countries” and remained “the best route to economic stability for working people”, Reynolds argued.
He dismissed comparisons with countries such as the Christmas Islands and Kosovo, which are also subject to a 10 per cent tariff, saying they “do not have the kind of complex trading relationship we have with the United States”.
In the face of calls from opposition parties to hit back or side with the EU, Reynolds insisted this was a “false choice” and rejected suggestions that Britain should follow Mark Carney, the prime minister of Canada, in adopting a more assertive approach to Trump. “Strength and wisdom are not opposing values. Backbone comes from putting your own national interests first and negotiating on a basis that is in the interests of all our constituents, not banding around rhetoric and escalating the situation,” Reynolds said.
The UK is readying what are known as “trade defences”. One of the biggest concerns in government is that Britain becomes a dumping ground for cheap foreign goods, and Whitehall has drawn up plans for quotas on imports to prevent British businesses being undermined. They may take time before they come into effect, however, as they are ultimately the response of a relatively small quango called the Trade Remedies Authority.
In the meantime Starmer is likely to have to wait his turn, as a queue of world leaders forms to speak to Trump. During his press conference the president appeared to revel in the idea.
“To all of the foreign presidents, prime ministers, kings, queens, ambassadors and everyone else who will soon be calling to ask for exemptions from these tariffs, I say, terminate your own tariffs, drop your barriers,” he said. “For decades, our country has been looted, pillaged, raped and plundered by nations near and far, both friend and foe alike.”
