1 day Ago By Archie Mitchell
Sir Keir Starmer has reportedly offered big US tech companies a major tax break in a last-ditch bid to dodge Donald Trump ’s damaging tariffs. The prime minister is prepared to lower the rate of the government’s digital services tax (DST) in a bid to win concessions from the president as a global trade war looms , it has emerged. It comes after a scramble in government to strike a deal with the US ahead of what Mr Trump has dubbed “liberation day”, with the president set to impose tariffs of up to 20 per cent on all imports to the US.
The PM conceded this week that an agreement would not be reached before the tariffs take effect, but his business secretary Jonathan Reynolds has said the UK could be the first country to do a deal with Washington on a carve-out from the levies. There is reportedly a deal on the table ready to be signed, covering areas such as artificial intelligence and other future technologies. But The Guardian on Wednesday also reported the UK has offered significant changes to the DST.
The move would reportedly see Britain lower the headline rate of the tax, in a major boost to major American firms such as Amazon, Facebook owner Meta and Google owner Alphabet, while at the same time applying the levy to companies from other countries. It would mean no tax income would be lost from the levy overall, with the DST currently raising £800m a year. Downing Street is also offering to change the tariffs that it imposes on American exports of chicken, beef and other meats, according to The Daily Telegraph , in a move which could further inflame tensions between Labour and farmers already furious at Sir Keir’s inheritance tax changes.
The Liberal Democrats urged Sir Keir to “work with our allies and stand up to Donald Trump”. Treasury spokesman Daisy Cooper warned: “Cutting taxes for US social media giants would be an insult to people with disabilities and carers seeing their support slashed by this government. “Rewarding a bully means he will only come back for more.
” Chancellor Rachel Reeves discussed the impending tariffs with her counterpart in Washington, Scott Bessent, on Monday. She then warned the Cabinet on Tuesday the measures will damage the UK economy, as talks were ongoing to find a carve-out. One study estimated a trade war sparked by Mr Trump’s tariffs could cost the world £1.
1 trillion. And think tank the Institute of Public Policy Research (IPPR) warned that 25,000 jobs are at risk in the UK car manufacturing industry alone, with Mr Trump planning 25 per cent tariffs on all automotive imports to the US. Education secretary Bridget Phillipson on Wednesday warned Britain is “entering a challenging period” and said a trade war with the US would be in no one's interests.
But she repeated the government’s insistence that all options are on the table in terms of retaliatory tariffs and other responses. She told Times Radio: “A trade war would be in no one's interest. So the approach that we're taking as a government is one that is calm and pragmatic.
"There won't be any knee-jerk reactions from this government. We will reserve all our options in terms of the responses that are available to us. But our focus at the moment is on continuing those discussions and seeking to get a good deal that's in the national interest.
” Mr Trump’s tariffs will be unveiled on Wednesday night at a Rose Garden event titled “Make America Wealthy Again”. The Treasury was contacted for comment..
