The UK expects to be affected by US tariffs and isn’t ruling out retaliating, Downing Street has stated.
The prime minister’s official spokesman stated talks on an financial deal between the 2 nations had been “constructive” however have been prone to final past Wednesday, when President Donald Trump has stated new 25% tariffs – or import taxes – on automobiles and automobile components will come into impact.
Trump has imposed a sequence of tariffs concentrating on items from different nations, with the UK already hit by 25% taxes on exports of metal and aluminium to the US.
Over the weekend he advised the tariffs would hit all nations, not simply these with the largest commerce imbalances with the US.
The UK has been in negotiations with the US in an try to safe an exemption.
Sir Keir Starmer’s spokesman stated: “When it comes to tariffs, the prime minister has been clear he will always act in the national interest and we’ve been preparing for all eventualities ahead of the announcement from President Trump, which we would expect the UK to be impacted by alongside other countries.
“We are having constructive discussions on a US-UK financial prosperity deal however we are going to solely do a deal which delivers financial prosperity for the British folks and we are going to solely act within the nationwide curiosity.”
Pressed on whether the government was hopeful of a deal to avert tariffs being reached by Wednesday, the spokesman said discussions between the UK and the US “will seemingly proceed past Wednesday”.
He stated the UK would “take a peaceful and pragmatic strategy” in response to any tariffs, arguing “a commerce conflict with the US will not be in anyone’s pursuits”.
But he added: “We rule nothing out in response.”
The Liberal Democrats have urged the government to hit back with its own tariffs, as Canada and the European Union have already done.
It comes after Sir Keir spoke to Trump over the phone on Sunday, with Downing Street saying the pair had “productive negotiations” about an economic deal.
The government has argued the UK has a relatively equal trading relationship with the US, compared to its other partners.
The independent Office for Budget Responsibility (OBR) has warned a reciprocal trade war would wipe billions off economic growth and all but eliminate the headroom Chancellor Rachel Reeves has to stay within her self-imposed rules on spending and borrowing.
This could lead to further tax rises or spending cuts if she wanted to avoid breaking her fiscal rules.
The OBR’s latest economic forecast, published on Wednesday, said GDP would be 0.6% lower than forecast this year and 1% lower next year in the most “extreme” scenario, in which the UK and other nations retaliated to Trump’s tariffs.
In an alternative scenario where the UK does not retaliate, the OBR has forecast a smaller reduction in growth, with GDP 0.4% lower than expected this year and 0.6% lower next year.
It is unclear how the UK would retaliate if tariffs do come into effect. There are a range of options available, from duties on sectors where British products are particularly important to the US, to focusing on specific products like Harley Davidson motorcycles.
UK car exports are worth about £7.6bn per year, and the US is the second largest market for UK cars after the European Union, according to car industry body the Society of Motor Manufacturers and Traders (SMMT).
Trump’s plan is expected a to hit British luxury car makers such as Rolls-Royce and Aston Martin.
The US president argues his measures will help American manufacturers and protect jobs, despite warnings prices could go up for consumers.
During a meeting between the prime minister and president at the White House last month, Trump hinted at “an actual commerce deal”, which may see the UK keep away from the form of tariffs he has been threatening different nations with.
https://www.bbc.com/news/articles/crrzl1l9w95o