Sir Keir Starmer today warned Donald Trump that Britain could yet hit back against US tariffs.
The Prime Minister said the UK reserves the right to respond to American trade levies, after the US President slapped a 25 per cent import tax on cars.
But Sir Keir added the Government was continuing frantic discussions with the White House aimed at ‘mitigating the impact’ of Mr Trump’s action.
As well the tariffs on all cars imported to America, the US President is also eyeing a series of other ‘retaliatory’ measures to come into force next Wednesday.
Mr Trump has dubbed this ‘liberation day’ and a huge number of other tariffs are anticipated.
This could include a general 20 per cent levy on UK products in response to the rate of VAT.
Labour has said they will take a pragmatic approach towards the threat of tariffs by seeking to strengthen transatlantic trade ties and pursue a wider UK-US economic deal.
This is in contrast to the EU’s response, with Brussels preparing a range of retailiatory measures against the US.
During a visit to Yorkshire on Friday, Sir Keir was asked whether the UK reserves to right to respond to US tariffs.
‘Yes, of course,’ the PM replied. ‘Obviously, any tariffs are concerning and we’re working hard with the industries and sectors likely to be impacted.
‘None of them want to see a trade war, which is why we’re engaged in discussions with the US about mitigating the impact of tariffs.
‘Now, that’s what we’re working hard on, but in answer to your question, yes – in the end, our national interest has to come first, which means all options are on the table.’
Some 16.9 per cent of UK car exports were to the US last year, representing a total of more than 101,000 units worth £7.6billion.
Industry minister Sarah Jones held a virtual meeting with automotive industry leaders to discuss tariffs on Friday.
A Government spokesperson said the minister listened to the attendees’ views on trade with the US, and they expressed their support for the Government’s approach.
They added that the US is an ‘indispensable ally and one of our closest trading partners, with £1.2 trillion invested in each other’s economies’.
Mike Hawes, chief executive of industry body the Society of Motor Manufacturers and Traders, said the announcement of tariffs was ‘not surprising but, nevertheless, disappointing’ and he urged both governments to strike a deal that avoids further damage.
In its latest assessment of the UK economy, the Office for Budget Responsibility warned a full-blown tariff war with the US could wipe 1 per cent off GDP next year.
This would derail Chancellor Rachel Reeves’ hopes of balancing the books and force her to implement more cuts or tax hikes.
That ‘worst-case scenario’ would come about if Mr Trump imposed 20 per cent tariffs on British goods and the UK reciprocated in kind, the watchdog said.
Tory MP Andrew Griffith, the shadow trade secretary, said: ‘This shows the cost of Labour squandering time by trying to return us to the EU rather than picking up the US trade deal we started.
‘After the emergency budget showed growth, inflation and employment all going in the wrong direction, Labour need a proper plan to get the UK economy back on track.
‘A US trade deal could be the answer. But with the threat of tariffs looming over British jobs, Labour must do more to secure it.’
Liberal Democrat MP Daisy Cooper, her party’s Treasury spokeswoman, called for the UK to be ready to hit back at US tariffs.
She said: ‘Our car industry is being left at the mercy of Trump and his destructive trade war.
‘We should be preparing to respond if needed, including through Tesla tariffs that hit Trump’s crony Elon Musk in the pocket.’