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Mr Trump is expected to slap import taxes on goods going to the US from around the world in a White House statement at 9pm. British businesses are braced for the impact of the president’s “liberation day” tariffs, which have the potential to derail the UK Government’s hopes for economic growth. At Prime Minister’s Questions, Sir Keir told MPs: “Let me be clear with the House, a trade war is in nobody’s interests and the country deserves – and we will take – a calm, pragmatic approach.
“That’s why constructive talks are progressing to agree a wider economic prosperity deal with the US. “That’s why we’re working with all industries and sectors likely to be impacted. “Our decisions will always be guided by our national interest, and that’s why we have prepared for all eventualities, and we will rule nothing out.
” The car industry has already learned its fate, with a 25% tariff on vehicles sent to the US – something which could cost an estimated 25,000 jobs in the UK. Intensive diplomatic efforts and negotiations on a UK-US economic deal are not expected to be enough to spare British exporters from Mr Trump’s tariff plans. The imposition of tariffs will make British goods more expensive in the US, which is likely to reduce demand.
Economists at the Office for Budget Responsibility have warned that US tariffs could eliminate Chancellor Rachel Reeves’s “headroom” against her day-to-day spending plans, requiring her to make more cuts or hike taxes to meet the rules she has set herself. The tariffs could knock up to 1% off the size of the UK economy if there is a full-blown trade war with the UK retaliating to Mr Trump’s measures. Trump’s tariffs have huge potential to completely destabilise the UK car manufacturing industry, but, as one door closes another one opens says @Narayanator .
Read our new report here: https://t.co/qoZe3AV5c4 pic.twitter.
com/XL1SgHxbzG — IPPR (@IPPR) April 2, 2025 Analysis from the Institute for Public Policy Research (IPPR) suggested tariffs on car imports would put 25,000 UK jobs at risk and “completely destabilise the UK car manufacturing industry”. Although a deal will not be reached before Mr Trump’s announcement, UK negotiators are pursuing an agreement with the US focused on technology. Such a deal could include possible changes to the digital services tax – which imposes a 2% levy on the revenues of several major US tech companies – in exchange for a carve-out from the tariffs.
Sir Keir did not deny that changes to the digital services tax are being considered. Easing access for US agricultural products to UK markets could also be on the table, although officials have insisted that food standards will not be lowered. Sentiment in the European financial markets, including London’s FTSE 100, was weak on Wednesday as investors awaited Mr Trump’s announcements.
Retaliatory tariffs from the UK are not expected immediately, as efforts focus on striking a deal with the White House. But European Commission chief Ursula von der Leyen signalled Brussels was prepared to respond, saying “we have the power to push back”. .
@PressSec on unfair trade practices on the U.S.: 🥛 50% tariff from the EU on American dairy📈 700% tariff from Japan on American rice🌽 100% tariff from India on American ag products🧈 300% tariff from Canada on American butter & cheese T-1 DAY UNTIL LIBERATION DAY! pic.
twitter.com/EzYqL42efJ — The White House (@WhiteHouse) April 2, 2025 It is not yet clear what Mr Trump will announce on Wednesday but his administration views the application of VAT as discriminating against US goods and could respond with a 20% tariff on imports from the UK. White House press secretary Karoline Leavitt said the new tariffs would take effect immediately, telling reporters: “April 2 2025 will go down as one of the most important days in modern American history.
” In the Commons, Tory leader Kemi Badenoch accused Sir Keir of taking decisions that have left the UK economy “fragile just as we face global trade wars”. Liberal Democrat leader Sir Ed Davey urged the Prime Minister to join other nations in an “economic coalition of the willing” to respond to the US tariffs..
