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The UK government has revealed that it expects to be hit by new tariffs from the US this week, as negotiations continue over a potential UK-US trade deal, the Guardian reported on Monday. The announcement has sent shockwaves through financial markets, with stocks in London seeing a sharp decline.
Downing Street confirmed today that it anticipates the UK will be impacted by tariffs, which are part of President Donald Trump’s ongoing push for what he calls “liberation day” tariffs, a strategy to leverage trade relations to benefit the US economy.
“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”, the Guardian quoted the Prime Minister’s official spokesperson as saying.
“Our trade teams are continuing to have constructive discussions to agree on a UK-US economic prosperity deal. But we will only do a deal that reflects this government’s mandate to deliver economic stability for the British people, and we will only act in the national interest,” the spokesperson added.
The situation has caused a significant drop in UK stocks, with the FTSE 100 index of blue-chip shares falling by 120 points, or 1.4%, marking a two-week low. The smaller FTSE 250 index, more focused on domestic UK companies, also saw a loss of 2%, according to the Guardian.
The UK’s trade teams are continuing their discussions with US counterparts, but Sir Keir Starmer’s official spokesperson reportedly said he is “not going to put a time frame on those discussions” and that they are “likely to continue beyond Wednesday”, acknowledging that a final agreement may not be reached before that day.
The UK will “take a calm and pragmatic approach in our response”, he said.
In response to questions about a potential trade war with the US, the UK government reaffirmed its stance that such a scenario would not be in the national interest. However, officials told the publication that they would “reserve the right to respond in a way that protects British industry” once the specifics of the tariffs are fully understood.
Sir Keir Starmer’s official spokesman confirmed that while a new budget would be presented in the autumn, the government would remain flexible in its approach depending on the situation. The Office for Budget Responsibility (OBR) is expected to update its forecasts at that time.
“We will always take an approach that suits the British economy,” the spokesperson reportedly said, adding, “We’ve been clear that a trade war with the US is not in the national interest, but we will reserve the right to respond in a way that does protect British industry once we’ve seen the detail.”
