BRITAIN is likely to be hit by US tariffs despite making “rapid progress” over a trade deal with Washington, prime minister Sir Keir Starmer said on Tuesday (1).
He spoke as US trading partners around the world braced for an expected fresh raft of tariffs from president Donald Trump, in addition to levies already imposed on steel and those set to take effect this week on cars.
“We’re working hard on an economic deal, which we’ve made rapid progress on ... but look, the likelihood is there will be tariffs,” Starmer told Sky News.
Britain has set out to strike a trade deal with the US since leaving the European Union at the start of the decade.
It is thought the UK government wants to agree some kind of economic deal before Wednesday (2) – termed “Liberation Day” by Trump, when he is set to unveil supposedly “reciprocal” tariffs, tailored to different trading partners.
Downing Street has described a potential agreement as an “economic prosperity deal”, indicating that it will fall short of a free trade deal that is ultimately sought by London.
As it stands, the US is the UK’s single largest country trading partner.
Starmer on Tuesday repeated that he must “act in the national interest”, even if at this stage the Labour government has no intention of engaging in a trade war.
However, “all options have to remain on the table”, the prime minister added.
Business secretary Jonathan Reynolds voiced confidence that the UK and US would come to some kind of arrangement over tariffs.
“If the US can reach an agreement with anyone, I believe it can with the UK,” he told Times Radio, citing work between the two nations during trade negotiations over recent weeks.
UK media has reported that London may scrap a tax on tech giants to avert US tariffs under Trump and clear a pathway to a trade deal.
Reynolds on Tuesday again hinted such an agreement could not be ruled out.
“I believe the framework of an agreement is certainly in place,” the business secretary told the BBC.
“We could sign heads of terms on that, and then talk about the detail over a specific timescale that would be to the US’s satisfaction going forward.
Donald Trump
“Whether the US is willing to come to agreement with countries is a decision for the US, but I believe the work we have done has made that possible.”
Unlike the EU and other major economies, Britain has not retaliated over US tariffs. Reynolds indicated again that London would try to avoid an escalation, saying British companies supported its “calm-headed approach”.
Britain has also adopted a light touch to AI regulation that is more closely aligned with the US than with the EU, a policy designed to attract investment from big tech firms and international investors.
Britain has the third-largest AI market globally, ranking behind only the US and China. It is home to companies including DeepMind, owned by Google, and BenevolentAI.
But Reynolds said there were red lines to the negotiations, highlighting “sensitive areas” that it would not discuss, such as food standards.
He said Britain had a higher chance than other countries of securing an exemption, and he remained hopeful that a deal would lead to tariffs being dropped in weeks or months, saying: “That would be my objective.”
Reynolds said it was not possible to give a timescale on when any reversal could come in, but warned London would have to consider retaliatory tariffs if it took too long.
“The longer we don’t have a potential resolution to that, the more we will have to consider our own position,” he said.
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