UK braced for Trump tariffs as No 10 acknowledges exports unlikely to be spared

British firms look set to be hit by Donald Trump’s tariffs after Downing Street acknowledged the UK was unlikely to be spared.

The US president is set to unveil sweeping import taxes on goods from countries around the world on Wednesday, an event Mr Trump has dubbed “liberation day”.

Sir Keir Starmer’s Government has been trying to negotiate an economic deal with the US, which it is hoped could protect UK businesses from the worst impacts of Mr Trump’s plans.

But that will not be in place before Wednesday and trade talks alone are unlikely to be enough to exempt the UK from the president’s desire to impose tariffs on imports to the US from around the world.

Mr Trump has already announced a 25% import tax will be introduced on all cars imported to the US, a measure which will be a blow to the UK’s automotive industry.

Some 16.9% of UK car exports were to the US last year, representing a total of more than 101,000 units worth £7.6 billion.

The levy is on top of a series of tariffs set to come into effect on April 2, which could include a general 20% tax on UK products in response to the rate of VAT, which Mr Trump deems to be discriminatory against the US.

The Prime Minister’s official spokesman said: “When it comes to tariffs the Prime Minister has been clear he will always act in the national interest and we’ve been actively preparing for all eventualities ahead of the expected announcements from President Trump this week, which we would expect the UK to be impacted by alongside other countries.

“Our trade teams are continuing to have constructive discussions to agree a UK-US economic prosperity deal.

“But we will only do a deal which reflects this Government’s mandate to deliver economic stability for the British people, and we will only act in the national interest.”

Asked whether the Government had given up hope of a UK-US deal being signed before the tariffs are announced, the spokesman said he is “not going to put a time frame on those discussions” but that they are “likely to continue beyond Wednesday”.

Mr Trump believes tariffs will protect US businesses from unfair competition from foreign rivals.

The new tariffs could derail the Government’s plans to grow the economy, and they come into force just after Chancellor Rachel Reeves made a series of cuts at the spring statement in order to restore a narrow buffer in the public spending headroom.

Losses deepened for the UK’s FTSE 100 stock exchange, which was trading around 1.3% lower during Monday.

European stocks are also still seeing sharp falls, and US markets have opened lower with the S&P 500 down about 1.4% in early trading.

The budget watchdog has warned that a full-blown trade war, in which the UK responds in kind to Mr Trump’s tariffs, could knock 1% off gross domestic product, a measure of the size of the economy, and wipe out Ms Reeves’ headroom.

The assessment from the Office for Budget Responsibility helps explain why so far, unlike other economies such as the European Union, Sir Keir’s government has refrained from retaliating against Mr Trump.

This is just further proof that, when Labour negotiates, Britain loses

The Prime Minister’s spokesman said: “You’ve got the OBR’s modelling and we’ve said previously a trade war with the US is clearly not in anybody’s interests.

“We continue to have constructive discussions on agreeing a deal with the US, but at the same time, we’ve also been clear that all options are on the table, we obviously reserve our right to respond, to protect our protect our industries.

“But we want to take a calm and pragmatic approach to this.

“I think British industry has also been clear that they want to see the Government having a dialogue with the United States and that’s what we’re going to continue to do and seek to achieve.”

Tory shadow trade secretary Andrew Griffith said: “This news is potentially a hammer blow not just to British businesses and workers but to (the Prime Minister’s) own Chancellor whose creative accounting at the emergency budget fails to include the impact of tariffs.

“This is just further proof that, when Labour negotiates, Britain loses.”

Liberal Democrats leader Sir Ed Davey said the UK should be prepared to hit back at Mr Trump’s tariffs.

Sir Ed said: “Ministers have rightly tried to avoid Donald Trump imposing his destructive tariffs on British businesses – but as we knew all along, Trump doesn’t care.

“Just asking nicely clearly doesn’t work with Trump, so we have to stand tall with our allies in Canada and Europe and show that we will not be bullied.

“That means being prepared to impose reciprocal tariffs if necessary, including on Elon Musk’s Teslas, and urgently negotiating a better trade deal with the EU to show Trump we have alternatives.”

Reform UK leader Nigel Farage, who is a prominent supporter of the US president, said that tariffs “won’t be popular with anybody, not me either” but that retaliation would be “an act of self-harm”.

“What disappoints me more than anything is we had a massive opportunity in Trump’s first term to do a free trade deal with America,” he said.

“We didn’t do it because the Conservatives didn’t deliver Brexit, we weren’t free to do it, but we did negotiate nearly three quarters of the chapters that we needed to get to that position… But I do think we can sort this out.”