Sir Keir Starmer and Donald Trump have engaged in “productive negotiations” regarding an economic deal between the UK and US, with Downing Street confirming that talks will continue at a rapid pace. The discussions come ahead of an impending deadline on US tariffs, with sources at No 10 indicating that the UK is prepared to retaliate against US trade taxes if necessary.
The phone call between the two leaders took place on Sunday night, as British negotiators seek a last-minute exemption from Trump’s proposed 25% levy on car imports, set to take effect on Wednesday. Trump has been implementing a series of tariffs targeting goods from various countries in the early stages of his second term, with the looming threat of additional taxes on the horizon.
Prime Minister Boris Johnson has expressed a desire to avoid a trade war with the US, emphasizing the importance of finding a mutually beneficial solution. However, Sir Keir Starmer has made it clear that the UK reserves the right to introduce reciprocal tariffs on the US if an exemption deal cannot be reached.
The Office for Budget Responsibility has warned that a trade war could have severe economic consequences, potentially reducing economic growth and restricting fiscal flexibility. The UK’s trading relationship with the US is significant, and any disruption could have far-reaching implications for both countries.
In the event that tariffs are imposed, the UK has a range of retaliatory options at its disposal. These could include targeting sectors where British products are essential to the US market or focusing on specific products, such as Harley Davidson motorcycles. The UK’s car exports, valued at approximately £7.6 billion annually, would be particularly vulnerable to Trump’s tariffs, affecting luxury car manufacturers like Rolls-Royce and Aston Martin.
Trump has defended his tariff measures as a means of supporting American manufacturers and preserving jobs, despite concerns about potential price increases for consumers. The president has indicated a willingness to prioritize American-made cars, even if it means higher prices for consumers.
During their call, Johnson and Trump also discussed the ongoing conflict in Ukraine, underscoring the importance of maintaining pressure on Russian President Vladimir Putin. The leaders agreed to continue working together to address the situation and support Ukraine in the face of Russian aggression.
Overall, the dialogue between the UK and US remains crucial as both countries navigate complex economic challenges and geopolitical tensions. The commitment to ongoing negotiations and cooperation underscores the significance of the relationship between these two global powers.
