Donald Trump imposed 10 per cent ‘reciprocal’ tariffs on the UK last night – but hit the rest of the world even harder as he vowed to stop the US being ‘pillaged’, ‘raped’ and ‘brutalised’.
The president also confirmed there will be a 25 per cent tariff on all foreign-made cars, in another blow for Britain that experts have warned could cost 25,000 jobs.
But Downing Street was breathing a sigh of relief as other countries facing even harsher punishment, with 10 per cent the ‘baseline’ level.
Now, all eyes will be on the London Stock Exchange early doors – after Wall Street stocks plunged as Donald Trump announced broad tariffs.
Holding up a chart with a list of tariffs being implemented from 5am on Saturday UK time, Mr Trump said the EU will face more pain at 20 per cent. China will be battered with 34 per cent, and Japan 24 per cent. Cambodia and Vietnam are both nearing 50 per cent, while no other G7 nation has 10 per cent. In an omission that immediately raised eyebrows, Russia was not on the roster at all.
Mr Trump said so-called ‘Liberation Day’ would be remembered as ‘the day American industry was reborn’, claiming there had been too much ‘plunder’ by other countries.
Watched by his Cabinet and blue-collar workers in the White House Rose Garden, he said he wanted to raise ‘trillions and trillions of dollars’ and start a new ‘golden age’.
Mr Trump said the tariff being imposed on UK imports was equivalent to that faced by US exports. However, most other countries will be charged ‘about half’ of their own tariffs.
A senior No10 source stressed ‘no tariffs are good’ but suggested the relatively low number for Britain ‘vindicated’ Keir Starmer’s approach.
‘We don’t want any tariffs at all, but a lower levy than others vindicates our approach. It matters because the difference between 10 per cent and 20 per cent is thousands of jobs,’ they said.
‘We will keep negotiating, keep cool and keep calm. We want to negotiate a sustainable trade deal, and of course to get tariffs lowered. Tomorrow we will continue with that work.’
Sir Keir had already acknowledged that his desperate efforts to secure an exemption from Mr Trump would be snubbed, despite their warm meeting in the Oval Office.
Despite the relatively lower level of tariffs, billions of pounds of exports to America by businesses are potentially affected, with fears thousands of jobs are on the line. Steel and aluminium imports are already facing 25 per cent tariffs.
The PM is set to avoid any ‘knee jerk’ retaliation as he still hopes to strike a wider trade deal in the coming weeks. Industry bodies said the news was a ‘blow’ and ‘deeply disappointing’, but voiced support for the government’s approach.
However, there are fears a full-blown global trade war is brewing – with the EU, China and other major powers considering their options.
US stocks plunged in after-hours trading after President Donald Trump announced the broad tariffs.
Within minutes of Trump’s announcement, futures tracking America’s flagship S&P 500 fell two per cent, while the Nasdaq dropped three per cent — the kind of falls not seen since the start of the pandemic.
Mr Trump appeared to have deliberately waited until markets were closed to make his announcement.
The US dollar dropped sharply against key currencies as he began his speech, but clawed back some ground.
Mr Trump swiped at ‘exorbitant VAT taxes’ in his speech – even though it is a general sales duty not targeted at imports.
He also jibed at ‘non-monetary barriers’, suggesting that obstacles such as bans on chlorinated chicken could be an issue in trade talks.
The president said he blamed his predecessors in the White House, rather than other nations for alleged trade imbalances, but added that ‘friends’ were often worse than ‘foes’.
Mr Trump said he was drawing a line under ‘unilateral economic surrender’, and the US could be ‘rich’.
‘In a few moments I will sign a historic executive order instituting reciprocal tariffs on countries throughout the world,’ he said.
‘Reciprocal. That means they do it to us and we do it to them. Very simple, can’t get any simpler than that.
‘This is one of the most important days in my opinion in American history. It’s our declaration of economic independence.’
The president insisted: ‘For decades, the United States slashed our trade barriers on other countries while those nations placed massive tariffs on our products and created outrageous non-monetary barriers to decimate our industries.
‘And in many cases, the non-monetary barriers were worse than the monetary ones.
‘They manipulated their currency, subsidised their exports, stole our intellectual property, imposed exorbitant VAT taxes to disadvantage our products, adopted unfair rules and technical standards and created filthy pollution havens.
‘They were absolutely filthy, but they always came to us and they said we’re violating we should pay for it.’
Talking about the tariffs he is about to put on other nations, Mr Trump told the White House press conference: ‘We will charge them approximately half of what they are and have been charging us. So the tariffs will be not a full reciprocal.
‘I could have done that, yes. But it would have been tough for a lot of countries.’
Mr Trump said: ‘I don’t blame these other countries at all. I blame former presidents and past leaders.
‘They let it happen to an extent that nobody can even believe,’ he said in a speech at the White House.’
Businesses voiced alarm at the bombshell dropped by the president, while accepting that it could have been worse for the UK.
The Society of Motor Manufacturers and Traders Ltd (SMMT) described the imposition of tariffs as ‘deeply disappointing’.
Mike Hawes, SMMT chief executive, said: ‘The announced imposition of a 10 per cent tariff on all UK products exported to the US, whilst less than other major economies, is another deeply disappointing and potentially damaging measure.
‘Our cars were already set to attract a punitive 25 per cent tariff overnight and other automotive products are now set to be impacted immediately. While we hope a deal between the UK and US can still be negotiated, this is yet another challenge to a sector already facing multiple headwinds.
‘These tariff costs cannot be absorbed by manufacturers, thus hitting US consumers who may face additional costs and a reduced choice of iconic British brands, whilst UK producers may have to review output in the face of constrained demand.’
UK Steel director general, Gareth Stace, said: ‘Three weeks ago, President Trump delivered a cataclysmic strike to UK steel exports for US manufacturers.
‘The new 10 per cent tariffs, stacked on top of the existing 25 per cent levies, are not only sticking the knife in again, but this time turning it in the wound for maximum effect.
‘The UK Government must continue its efforts to strike a deal with the US, but we recognise that this requires willingness from both sides. Domestic trade policy on the other hand is entirely within the Government’s gift and it can immediately take action to strengthen our trade defences.
‘We cannot afford to wait any longer as our exports are being damaged, and our market is being undercut by rising imports. UK Steel has warned that the steel crisis has been deepening for some time and bold, decisive and significant interventions are needed now.’
Rain Newton-Smith, chief executive of the CBI said: ‘Business has been clear: there are no winners in a trade war. Last night’s announcements are deeply troubling for businesses and will have significant ramifications around the world.
‘A cool and calm reaction from the UK Government is the right response: UK firms need a measured and proportionate approach which avoids further escalation. Retaliation will only add to supply chain disruption, slow down investment, and stoke volatility in prices.’
The Federation of Small Businesses (FSB) said 59 per cent of small UK exporters currently sell into the US market, suggesting emergency support will be needed.
‘Tariffs will cause untold damage to small businesses trying to trade their way into profit while the domestic economy remains flat,’ Tina McKenzie, the FSB’s policy chair said.
Business Secretary Jonathan Reynolds said the US ‘is our closest ally’ and ministers would ‘remain calm and committed’ to reaching agreement.
In a statement following the announcement, he said: ‘The US is our closest ally, so our approach is to remain calm and committed to doing this deal, which we hope will mitigate the impact of what has been announced.
‘We have a range of tools at our disposal and we will not hesitate to act. We will continue to engage with UK businesses including on their assessment of the impact of any further steps we take.
‘Nobody wants a trade war and our intention remains to secure a deal. But nothing is off the table and the Government will do everything necessary to defend the UK’s national interest.’
Shadow trade secretary Andrew Griffith described the tariff announcement as ‘disappointing news’ and suggested that Brexit spared the UK from higher import taxes.
He called on the Government to ‘agree a fair deal’ with the US for the benefit of businesses and consumers.
In a statement, Mr Griffith said: ‘This is disappointing news which will worry working families across the country.
‘Labour failed to negotiate with President Trump’s team for too many months after the election, failed to keep our experienced top trade negotiator, and failed to get a deal to avoid the imposition of these tariffs by our closest trading partner.
‘The Chancellor’s emergency budget of just a week ago with its inadequate headroom is now at risk, casting uncertainty about more taxes or spending cuts. Sadly, it is British businesses and workers who will pay the price for Labour’s failure.’
He added: ‘The silver lining is that Brexit, which Labour ministers voted against no less than 48 times, means that we face far lower tariffs than the EU: a Brexit dividend that will have protected thousands of British jobs and businesses.’
Chancellor Rachel Reeves acknowledged this afternoon that the UK will not be ‘out of the woods’ even if it can get exemptions.
Ms Reeves said the main impact on the economy would be from ‘global tariffs’ rather than UK-specific ones, thanks to depressed demand and higher inflation in other countries.
She said: ‘I think that’s really important to understand, because even if we are able to secure an economic deal with the United States – which we very much want to secure and are working hard to secure that – even if that’s possible, (it) doesn’t mean somehow that we are out of the woods and not impacted by tariffs.
‘So we don’t just want to see an agreement between the UK and the US, we want to see free trade, fair trade continue.’
Ms Reeves insisting the Government would not be ‘posturing’ in search of a ‘quick headline’.
The Chancellor – whose Spring Statement spending plans are already at threat of being torched – said she had been talking to UK exporters who urged against a rushed response.
Ms Reeves told the Commons Treasury Committee: ‘We don’t want to be posturing here, the prize on offer is a good economic agreement between us and the United States’.
‘We are not going to do anything to put that in jeopardy, we are not going to rush into action to get a quick headline.’
At PMQs, Sir Keir said the Government has ‘prepared for all eventualities’ and is working with companies likely to be hit by the tariffs.
He told MPs: ‘A trade war is in nobody’s interests and the country deserves – and we will take – a calm, pragmatic approach.
‘That’s why constructive talks are progressing to agree a wider economic prosperity deal with the US.
‘That’s why we’re working with all industries and sectors likely to be impacted.
‘Our decisions will always be guided by our national interest, and that’s why we have prepared for all eventualities, and we will rule nothing out.’
The imposition of wider tariffs will make a range off British goods more expensive in the US, which is likely to reduce demand.
The UK could also becomes a destination for imports diverted from the US due to the high cost, potentially flooding the market and hitting domestic producers.
Economists at the Office for Budget Responsibility have warned that US tariffs could eliminate Ms Reeves’s ‘headroom’ against her day-to-day spending plans, requiring her to make more cuts or hike taxes to meet the rules she has set herself.
The tariffs could knock up to 1 per cent off the size of the UK economy if there is a full-blown trade war with the UK retaliating to Mr Trump’s measures.
Analysis from the Institute for Public Policy Research (IPPR) suggested tariffs on car imports would put 25,000 UK jobs at risk and ‘completely destabilise the UK car manufacturing industry’.
UK negotiators are pursuing an economic agreement with the US focused on technology.
Such a deal could include possible changes to the digital services tax – which imposes a 2 per cent levy on the revenues of several major US tech companies – in exchange for a carve-out from the tariffs.
Sir Keir did not deny that changes to the digital services tax are being considered.
Easing access for US agricultural products to UK markets could also be on the table, although officials have insisted that food standards will not be lowered.
British businesses that are in the firing line
Jaguar Land Rover
One in eight cars built in the UK is exported to the US, worth £6.4billion in 2023, leaving the sector especially exposed to Trump’s tariffs.
Trump wants carmakers to move production to the US to swerve tariffs but research from GlobalData shows that Jaguar and Land Rover owner JLR makes no cars in America, making it the most at risk of any car brand from a transatlantic trade war.
Some 25,000 UK jobs exist at places like JLR in the West Midlands and the BMW’s Mini factory in Oxford, according to the Institute for policy Research think-tank.
Most of the UK-made vehicles that go to the US are luxury cars, including Aston Martin and Volkswagen-owned Bentley.
Others are high-end vehicles such as McLaren supercars, selling just over 2,100 annually, some costing upwards of £250,000.
That makes them vulnerable to tariffs, though they will hope to pass the cost to their wealthy customers without denting their sales.
The US is a key market for Midlands-based car maker JLR, which is owned by India’s Tata Group and has factories in Coventry, Solihull and Wolverhampton.
Just over 26,000 Mini brand vehicles were sold in the US in 2024, according to BMW’s North American operations, although this was 21 per cent lower than the 33,500 cars it sold there in 2023. All Minis are made at its Cowley factory near Oxford.
The US is also a key market for Aston Martin, which makes cars at Gaydon in Warwickshire. The loss-making manufacturer generated around a third of its £1.6billion revenue for 2024 in the US, selling 6,030 cars – a drop of 9 per cent on the prior year.
AstraZeneca and GSK
The UK’s two largest drug makers, Cambridge-based AstraZeneca and London-headquartered GSK, are among the jewels in the British economy with a combined value of £237billion.
Both companies rely heavily on the US for sales, with AstraZeneca raking in £18billion from American customers last year, around 43 per cent of its total sales. GSK, meanwhile, received £16.4billion, more than half of its sales for 2024.
The US is the main destination for pharma exports from the UK.
Around £8.8billion worth of medicinal and pharmaceutical products were shipped to America in 2023, according to data from the Office for National Statistics (ONS).
This is around the same value as goods exported by the British car industry to the US.
Overall, the UK’s pharma sector employs over 73,000 people, meaning a slump in demand from the US could jeopardise a key British industry.
The industry also relies on a complex web of supply chains that source ingredients for its drugs from all over the world, including the US, which could be upended by tariffs.
US pharma giants with operations in the UK could also be disrupted by fresh tariffs, potentially putting more British jobs at risk.
Johnnie Walker whisky
Diageo, the owner of brands such as Johnnie Walker whisky, is bracing itself for a hard hit from Trump’s tariffs measures, which are expected to include levies on scotch.
Americans have long loved quintessentially British whisky brands, with the UK exporting around £1billion worth of scotch to the US every year.
There are fears among distillers that the sector will see a repeat of a previous 25 per cent US tariff on scotch that was imposed under the previous Trump administration in 2019 which cost the industry over £600million in sales before it was repealed in 2021.
It is a particularly worrying time for Diageo’s 4,500 UK employees including staff at its 29 distilleries in Scotland.
Overall, the UK’s scotch industry employs 41,000 people in Scotland and 25,000 elsewhere in Britain.
Diageo is also at risk from Trump’s levies against Canada and Mexico. The drinks giant owns Canadian whiskey brand Crown Royal as well as Mexican tequila sellers including Don Julio and George Clooney’s Casamigos.
In February, Diageo boss Debra Crew warned that tariffs on Canada and Mexico could wipe £161million from the group’s profits, a number that could grow if similar levies are applied to the UK.
Rolls-Royce
Jet engine maker Rolls-Royce forms a key chunk of the UK’s aerospace industry, one of the largest in the world.
The company relies heavily on the US as a source of demand for its engines, exporting around a quarter of its new models to America last year.
As a result, there are fears levies on UK aerospace exports could damage the company’s business, which currently employs around 22,000 people in Britain.
Last month reports emerged that Rolls-Royce was drawing up emergency plans to shift production to its factories in the US and expand operations in North America to avoid any new tariffs imposed by Trump.
Rolls-Royce raked in around £5.5billion from the US last year, around a third of its total sales for 2024 and more than double the £2.6billion of revenue it made from the UK.
It is a key supplier to the US Department of Defense as well as major aerospace manufacturers such as Lockheed Martin and Boeing.
The company previously warned investors that ‘rising protectionism’ from Trump could lead to higher costs and ‘realign’ global supply chains.
Alongside Rolls-Royce, fresh tariffs threaten to deal a heavy blow to the UK’s wider aircraft sector, which made £2billion from US exports in 2023.
BAE Systems
UK defence giant BAE Systems makes a large chunk of its money in the US.
Sales to America were worth £12.5billion last year, nearly half of the £28billion the company made in 2024.
As a result, a blanket levy on goods entering the US is likely to weigh heavily on the firm’s profit margins.
One potential upside is renewed demand for defence spending in the UK and Europe, which has seen the value of arms makers on the continent surge as countries look to beef up their armed forces and reduce reliance on the US.
This has been helped by recent commitments from Prime Minister Keir Starmer and Chancellor Rachel Reeves to boost British defence spending to 2.6 per cent of national income by 2027 from its current level of 2.3 per cent with plans to lift it to 3 per cent after 2029.
ADS, the UK aerospace and defence trade association, previously warned that tariffs would put businesses at risk as new levies will drive up the costs of assembly equipment and materials that are imported by the US.
British Steel
The UK’s struggling steel sector is already feeling the heat from Trump after the US president last month slapped a 25 per cent tariff on steel and aluminium imports from Britain.
The bosses of British Steel and Tata Steel, the two major players in the industry, previously warned MPs that the levies were driving away business.
There are also concerns that cheap steel could flood the UK market from abroad as overseas producers such as China look for new customers outside the US.
British Steel in particular is facing an existential threat fuelled by the new levies after talks between its Chinese owner Jingye and the Government over a funding package broke down last week.
The company is now planning to close two blast furnaces in Scunthorpe, putting 2,700 jobs at risk. The shutdown would also leave the UK as the only country in the G7 group of developed nations without the ability to produce its own steel.
Earlier this week, local councillors in North Lincolnshire called on the government to nationalise British Steel to safeguard jobs at the Scunthorpe plant.
The move has not been ruled out, but industry minister Sarah Jones has said the ‘preferred approach’ would be to hash out a deal with Jingye to keep the plant open.
Burberry
Burberry, the maker of the iconic trench coat, is one of the UK luxury goods companies set to be hit by tariffs.
The Americans buy £13billion worth of British luxury products of every type each year.
But they have a particular passion for Burberry’s cool Britannia style. In the last financial year, the company’s North American sales amounted to £603million, 20 per cent of total turnover.
Last Christmas a return to the classic Burberry plaid and other ranges caused a bounce in demand at Burberry’s 50 stores in the US which are in upmarket retail districts in New York and Los Angeles.
The importance of the US to the brand is reflected in the appointment of an American – Joshua Schulman – to the post of chief executive last summer.
Burberry, which makes some of its coats in Yorkshire, is not the only British brand close to the hearts of American luxury lovers.
Others include Mulberry, 40 per cent of whose handbags are manufactured in Somerset, and Watches of Switzerland which, despite its name, is a British company with stores in the US.
Other smaller businesses include Smythson, the stationery group and small craft furniture firms whose bespoke output adorns uptown Manhattan penthouses.
Walpole, the British luxury goods trade body, says that North America is one of the biggest global markets for our upmarket brands, representing 24 per cent of exports of such items.