Donald Trump has hit the UK with tariffs of 10% on exports to the US as he ignited a global trade war that could wipe billions off economic growth.
The US president accused other nations, including allies, of “looting, pillaging, raping and plundering” the US, as he announced tariffs on economic rivals including 20% on the EU and 34% on China as part of what he dubbed “liberation day”.
Downing Street, which had been expecting a 20% rate to be imposed on the UK, expressed relief to have escaped the higher rate. Keir Starmer’s more conciliatory approach to the Trump administration appeared to have paid off.
However, the UK’s growth forecasts are likely to be downgraded as a result, and the tariffs could cost thousands of jobs and force the government to implement further spending cuts or tax rises in autumn.
UK ministers have ruled out imposing retaliatory barriers while talks on an economic deal with the US continue, and are hoping for further carve-outs for UK companies, which export more than £60bn worth of goods to the US each year.
In a watershed announcement for global trade, Trump announced that he was setting a universal “baseline” 10% tariff on imports into the US, while hitting dozens of trading partners with higher levies of up to 50%.
He also hit out at “exorbitant” VAT rates, which he viewed as a barrier to US firms seeking to sell into markets such as the UK where the taxes apply.
At a press conference in the White House Rose Garden, he said: “For decades, our country has been looted, pillaged, raped and plundered by nations near and far, both friend and foe alike … our country and its taxpayers have been ripped off for more than 50 years, but it is not going to happen any more.
“This is one of the most important days, in my opinion, in American history. It’s our declaration of economic independence. For years, hard-working American citizens were forced to sit on the sidelines as other nations got rich and powerful, much of it at our expense, but now it’s our turn to prosper.”
Addressing a crowd including his vice-president, JD Vance, the cabinet, White House aides and US workers, Trump added: “This will be, indeed, the golden age of America. It’s coming back, and we’re going to come back very strongly.”
After the announcement, Jonathan Reynolds, the business and trade secretary, 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 today.
“We have a range of tools at our disposal and we will not hesitate to act … 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.”
A No 10 source said: “We don’t want any tariffs at all, but a lower levy than others vindicates our approach. It matters because the difference between 10% and 20% is thousands of jobs.”
Earlier, Starmer had told MPs the government was “prepared for all eventualities” and while all options were on the table he would avoid any kneejerk response.
UK officials are understood to have reached broad agreement with US counterparts on a trade deal, focusing on technology but including other sectors, which they hope will eventually reduce tariffs. However, they acknowledged getting a trade deal over the line could take weeks or months.
There is also a risk of the UK being flooded by cheap goods from countries such as China as trade is diverted from the US to other markets, and the government is drawing up plans to protect key industries such as pharmaceuticals, cars, food and drink.
“A trade war is in nobody’s interest, and the country deserves, and we will take, a calm, pragmatic approach,” Starmer told MPs at prime minister’s questions.
“That is why constructive talks are progressing to agree a wider economic prosperity deal with the US. That is why we are working with all industries and sectors likely to be impacted.
“Our decision will always be guided by our national interests, and that’s why we have prepared for all eventualities, and we will rule nothing out.”
He added: “It is important at moments like this that we don’t have kneejerk reactions, that we are cool-headed about this.”
However, Rachel Reeves revealed the UK was in talks with trading partners about how to respond, and had spoken to the European trade commissioner, Valdis Dombrovskis, about the EU’s plans to retaliate with their own tariffs.
The chancellor insisted the UK would not jeopardise the possibility of its own economic deal with the US by “posturing” in response to tariffs.
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“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,” she told the Treasury select committee.
But she warned that the UK would not be “out of the woods” even if it secured a deal, as the main impact on the British economy would be from global tariffs rather than UK-specific ones, thanks to depressed demand and higher inflation in other countries.
Business groups and unions reacted with dismay to the announcement. The Institute of Directors’ Emma Rowland said: “The implementation of these ‘liberation day’ tariffs will be a blow to British businesses, eliminating any hopes that the UK would be able to avoid the crosshairs of the global trade war.
“The UK government has so far sought to pursue constructive engagement with the US administration and with other trading partners. We are supportive of this pragmatic and level-headed approach.”
Paul Nowak, general secretary of the Trades Union Congress, said: “Donald Trump has just made the strongest possible argument for the UK to positively reset its economic relationship with the EU, our largest market. In the face of punitive and arbitrary tariffs, the government must do everything it can to protect British jobs and industry.”
In its economic forecast last week, the Office for Budget Responsibility warned that the most “severe” scenario, in which the UK and other nations retaliated to US tariffs, would result in GDP being 0.6% lower than expected this year and 1% lower next year.
An alternative scenario, in which the UK did not retaliate, would mean a smaller reduction in growth, with GDP 0.4% lower than expected this year and 0.6% lower next year.
Despite repeated criticism of Canada and Mexico, the US’s two closest trading partners, Donald Trump did not announce any “reciprocal tariffs” on the two North American countries.
The US dollar was falling sharply against key currencies on Wednesday evening. The dollar had dropped about 0.7% against the pound, at 0.768, shortly after the speech began.
Trump confirmed a previously announced 25% tariff on cars imported into the US, set to come into effect early on Thursday, hitting a UK export market to the US worth £6.4bn, which includes luxury car manufacturers such as Rolls-Royce and Aston Martin.
The US president has already imposed 25% tariffs on steel and aluminium imports, and industry bosses have warned that customers were already looking for alternative suppliers and in some cases cancelling orders.
The White House’s tariff wars also risk reopening simmering Brexit tensions in Northern Ireland, which has continued to apply EU customs laws since Brexit, meaning splits between London and Brussels over the response to US tariffs could drive a wedge between it and the rest of the UK.
EU retaliatory tariffs on US imports would need to be paid by Northern Irish importers, even if Starmer secured a carve-out for the UK or chose not to immediately respond. Businesses can claim back the tax through a reimbursement scheme but trade experts said the issue could reopen old political sores.
The EU said Ursula von der Leyen, the president of the European Commission, would set out its response on Thursday morning.
The shadow trade secretary, Andrew Griffith, described Trump’s tariff announcement as “disappointing news” but suggested that Brexit had spared the UK from higher import taxes.
He said: “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.”
