The government will keep pushing for a deal to avoid a “trade war” after US President Donald Trump imposed new tariffs globally, the Business Secretary Jonathan Reynolds has said.
Trump announced fresh levies on goods coming into his country including 10% on all UK imports and 20% on those from the European Union.
The UK has spent weeks working on a trade deal with the US to avoid the full impact of the level of tariffs introduced on countries such as Canada and China.
A Downing Street source said the UK’s lower tariff “vindicates” the government’s plans, because “the difference between 10% and 20% is thousands of jobs”.
Responding to the new tariffs, Reynolds said the government remained “fully focused” on negotiating a deal with the US that would strengthen their “balanced trading relationship”.
“We have a range of tools at our disposal and we will not hesitate to act,” he said.
The US plan sets a baseline tariff on all imports of at least 10%, with items from countries that the White House described as the “worst offenders” facing far higher rates for what Trump said was payback for unfair trade policies.
His move breaks with decades of American policy embracing free trade, and analysts said it was likely to lead to higher prices in the US and slower growth around the world.
The government’s official forecaster estimates a worst-case scenario trade war could reduce UK economic growth by 1% and wipe out the £9.9bn of economic headroom Chancellor Rachel Reeves’s gave herself at last week’s Spring Statement.
A Downing Street source told the BBC: “We don’t want any tariffs at all, but a lower levy than others vindicates our approach. It matters because the difference between 10% and 20% is thousands of jobs.
“We will keep negotiating, keep cool and keep calm,” the source said, adding: “Tomorrow we will continue with that work.”
The government will hold a series of talks with affected businesses on Thursday to provide support and discuss a response.
Sebastian Gorka, an adviser to US President Donald Trump, told BBC Newsnight as much when he said the UK is getting a “special rate” on tariffs.
“After Brexit you have reaffirmed your independence and I think that is been proven today by the special rate that has been afforded to the UK,” he told the programme, adding that “the exempted rate” could be “improved” in the future.
Diplomatic efforts are still ongoing, and as part of the efforts to get a deal, Lord Mandelson, the UK ambassador, has had meetings in the White House with JD Vance, the vice-president, and Susie Wiles, the president’s chief of staff.
For the moment, the UK says it will not be “jumping into a trade war” with retaliatory tariffs Prime Minister Sir Keir Starmer said – a repeat of the response to Trump’s earlier tariffs on steel and aluminium.
Sir Keir told his cabinet this week he was “keeping all options on the table” to respond to the tariffs, which economists have warned could damage the UK economy and increase the cost of living.
Inside government officials hope that Wednesday’s announcement sets a “ceiling” on negotiations, not the final price, and can be talked down.
The government’s approach has been backed in some of the early responses from the UK business sector.
The Confederation of British Industry (CBI) has said the government “has rightfully tried to negotiate a carve-out” and businesses need a “measured and proportionate approach”.
But Conservative shadow trade secretary Andrew Griffith accused Labour of “failing to negotiate with President Trump’s team” in time.
“Sadly, it is British businesses and workers who will pay the price for Labour’s failure,” he said.
“The silver lining is that Brexit – which Labour ministers voted against no less than 48 times – means that we face far lower tariffs than the EU: a Brexit dividend that will have protected thousands of British jobs and businesses.”
In contrast, the Lib Dems urged the government to consider using “retaliatory tariffs where necessary” and form a “coalition of the willing against Trump’s tariffs” with other countries.
Government sources believe talks between the US and the UK have made good progress, but have been derailed by Trump’s public comments.
At different times, statements by Trump about his tariffs are said to have differed from what his negotiating team had previously understood his position to be.
The deal would be broader than just reducing tariffs, focusing on technology but also covering elements of trade in goods and services as well as agriculture – a controversial area in previous unsuccessful US-UK trade talks.
Chancellor Rachel Reeves has suggested the UK could change its taxes on big tech firms as part of a deal to overturn US tariffs.
The digital services tax, introduced in 2020, imposes a 2% levy on tech firms, including big US firms such as Amazon, bringing in about £800m in tax per year.
The UK motoring industry, also hit with an additional 25% tax on all car import to the US announced this week, called the tariffs “deeply disappointing”.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, called the US announcement “yet another challenge to a sector already facing multiple headwinds”.
