UK to keep pushing for a trade deal after Trump's 10% tariffs

Lucy White, Bloomberg News on Apr 2, 2025

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The U.K. refrained from retaliation and said it would maintain its push for a U.S. trade deal after President Donald Trump slapped tariffs of 10% on all imports from Britain as part of a wider global package which he dubbed “Liberation Day” for his country.

“Our approach is to remain calm and committed to doing this deal, which we hope will mitigate the impact of what has been announced today,” Business and Trade Secretary Jonathan Reynolds said late Wednesday in a statement. “Nobody wants a trade war.”

While the tariffs on Britain are lower than the 20% levy applied to its neighbors in the European Union, and well below the 34% slapped on China and 46% on Vietnam, they are nevertheless a blow to Prime Minister Keir Starmer whose Labour government has worked for weeks to secure a U.K. exemption from Trump’s tariff war.

Moreover, the 10% levy placed on British goods is equal to the rate at which Trump’s team calculated Britain charges on American products — even as other countries were given “discounted” rates for what the president termed “kind reciprocal” tariffs. Trump said 10% was a “minimum baseline” for all countries.

One Downing Street official said the lower tariff on the U.K. vindicated its approach of negotiating with the U.S. President. They added that the difference between a 10% and 20% levy was thousands of jobs.

Capital Economics has estimated that the U.S. imposition of 10% tariffs on UK goods would shave between 0.01% and 0.06% off Britain’s gross domestic product, while the indirect impact from changes to global trade flows could further knock economic output by between 0.01% and 0.13%. That’s damaging for Starmer’s Labour Party, which was elected on a promise to boost economic growth.

Reynolds said he would continue to seek a carve-out in talks with his U.S. counterpart in the days and weeks ahead, emphasizing that the U.K. had “a range of tools at our disposal and we will not hesitate to act” to mitigate the impact of the tariffs. “Nothing is off the table and the government will do everything necessary to defend the U.K.’s national interest,” he said.

Even if the U.K. does secure a deal excluding British exports from U.S. tariffs, the country will still be affected by global repercussions of Trump’s trade policies, including retaliatory action taken by other countries, Chancellor of the Exchequer Rachel Reeves told a panel of lawmakers earlier on Wednesday.

“It doesn’t mean that somehow we are therefore out of the woods and not impacted by tariffs,” Reeves told the House of Commons Treasury Committee. “The specific tariffs on the UK are less relevant to the growth and inflation impacts than the global picture because we are an open trading economy, and depressed demand from overseas because of tariffs, higher inflation overseas because of tariffs has a direct impact on the U.K.”

Trump has said the levies are needed to compensate for policies abroad that affect the competitiveness of U.S. companies in foreign markets, including measures such as the UK’s value added tax, a sales levy.

British officials had initially believed they could secure an exemption before Wednesday’s announcement by Trump, with bargaining chips including concessions on Britain’s digital services tax — which affects large U.S. corporates such as Facebook owner Meta, Amazon and X.

But with Washington announcing that tariffs on steel, aluminum and autos would all hit the U.K., hopes of a concession on the bigger package of levies faded as April 2 drew closer, with civil servants working around the clock to model how various tariffs might affect the U.K. economy.

“The country deserves, and we will take, a calm, pragmatic approach,” Starmer told the House of Commons earlier on Wednesday.

That’s an approach backed by British business. The manufacturing lobby MakeUK said in a statement that “this isn’t the time for a trade war,” while Shevaun Haviland, director-general of the British Chambers of Commerce, commended the government’s “cool head.”

“This is a marathon not a sprint, and getting the best deal for the U.K. is what matters most,” Haviland said. “Retaliatory tariffs should only be a last resort.”

The country’s biggest corporate lobby group, the Confederation of British Industry, also said a “cool and calm reaction” was the correct one.

“Business has been clear: there are no winners in a trade war,” CBI Chief Executive Officer Rain Newton-Smith said in a statement after Trump’s press conference. “Today’s announcements are deeply troubling for businesses and will have significant ramifications around the world.”

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(With assistance from Alex Wickham.)