Starmer Signals Potential Trade Retaliation as UK Braces for Trump Tariffs

[Social Media]

 

Prime Minister Keir Starmer has indicated that the UK may retaliate against tariffs imposed by Donald Trump, stating that “all options are on the table” as officials engage in urgent talks with the White House to prevent car tariffs that could amount to £25 billion. These tariffs pose a significant threat to the British economy, potentially forcing Chancellor Rachel Reeves to introduce a new tax raid in October.

 

The looming tariff crisis comes as concerns grow over the Chancellor’s diminishing fiscal headroom, which has already been halved due to higher borrowing costs. Speaking in Paris on Thursday, Starmer emphasized the importance of working with industry while keeping all potential responses available. “The industry does not want a trade war, but it’s important that we keep all options on the table,” he said.

 

The UK is racing to secure a deal before Wednesday, a day President Trump has dubbed Liberation Day, when he plans to impose new tariffs on trading partners. Experts have warned that Britain could face a tariff equivalent to VAT, potentially reaching £25 billion. There is increasing speculation that the UK might drop its digital services tax as part of negotiations. This levy, which imposes a 2 percent tax on revenues from search engines, social media platforms, and online marketplaces that benefit from British users, has been a longstanding point of contention with the US.

 

 

Business Secretary Jonathan Reynolds has not ruled out revising or eliminating the tax in exchange for relief from US tariffs. “We have always been of the view as a country that this has to be something ideally agreed on an international basis, but it’s not that DST has been put in place as something that can never change or we can never have a conversation about it,” he said.

 

Reynolds was in Washington last week for discussions with US Commerce Secretary Howard Lutnick, US Trade Representative Jamieson Greer, and Trump’s UK envoy Mark Burnett. A government source indicated a strong mutual interest in finalizing a deal before Wednesday, stating, “There is appetite on both sides for a deal. We are keen to get it done.”

 

On Wednesday, Trump announced a 20 percent tariff on vehicles imported into the US, set to take effect on April 2, a move that could be devastating for the UK automotive industry. With approximately 80 percent of British-made cars being exported and 16.9 percent of those going to the US—amounting to over 101,000 units worth £7.6 billion—the impact could be severe. Data from the Society of Motor Manufacturers and Traders confirms that the US is the UK’s second-largest car export market after the European Union.

 

Mike Hawes, the society’s chief executive, called the tariff decision “not surprising but, nevertheless, disappointing” and urged both governments to reach an agreement to minimize damage. “If, as seems likely, additional tariffs are to apply to UK-made cars, it’s a blow to a long-standing and productive relationship,” he said. Following the announcement, shares in Aston Martin dropped sharply, falling approximately 6 percent when the stock market opened on Thursday morning.

 

Starmer acknowledged the gravity of the situation but maintained that he would not rush into a trade war with the US. “I think tariffs are very concerning, there’s no doubt about that. And I’m really clear in my mind that the sector, the industry, does not want a trade war,” he stated. He emphasized the need for a measured approach, working closely with industry to formulate a response. “Rather than jumping into a trade war, it is better, pragmatically, to come to an agreed way forward on this, if we can, and that’s why we’re intensively engaging in the way that we are,” he added.

 

One potential resolution could involve modifying or removing the digital services tax, which Trump has long considered an unfair burden on American companies. On Wednesday, Chancellor Reeves echoed Reynolds’ sentiment, describing the tax as “temporary” pending a broader international agreement. However, Reeves clarified that the UK is not currently planning retaliatory tariffs on US goods. “We’re not at the moment at a position where we want to do anything to escalate these trade wars. Trade wars are no good for anyone. It will end up with higher prices for consumers, pushing up inflation after we’ve worked so hard to get a grip of inflation, and at the same time will make it harder for British companies to export,” she told Sky News.

 

Tory leader Kemi Badenoch, speaking on the Telegraph’s Daily T podcast, suggested that trade deal negotiations should include discussions on the digital services tax. “A trade deal is always about negotiating a plethora, a plethora of issues,” she said. “I can’t remember specifically what the digital services tax is. I don’t like taxes. Generally. I like us to trade freely. If it’s something that is up for debate, it should be part of a bigger package with UK-US trading.”

 

Meanwhile, the Liberal Democrats have urged the government to take a tougher stance, calling for retaliatory tariffs on US car manufacturers such as Tesla, owned by Trump ally Elon Musk. Daisy Cooper, the party’s deputy leader, accused the government of being overly passive. “The Government strategy so far seems to be to cower in the corner and just ask Donald Trump to be nice to us, and just to hope that he doesn’t do anything nasty,” she told BBC Radio 4’s Today programme.

 

The proposed import tax on cars is part of a broader set of reciprocal tariffs set to take effect on April 2, potentially including a general 20 percent levy on UK goods in response to VAT rates. The Office for Budget Responsibility has warned that a full-scale tariff war with the US could slash 1 percent off the UK’s GDP next year, jeopardizing Reeves’ fiscal plans and potentially forcing deeper spending cuts or tax hikes.

 

Richard Hughes, chairman of the budget watchdog, underscored the risks, stating, “This represents the crystallization of one of the risks that we highlighted around our central forecast, which was one of escalating global trade tensions.” He explained that in a worst-case scenario, where the UK retaliates in kind, the economy could suffer substantial losses. “The UK exports, in terms of goods to the US, around 2 percent of GDP,” Hughes said.

 

“Car exports are about 10 percent of that. So that’s affecting directly UK goods exports of around 0.2 percent of GDP. So what Trump’s announced overnight is not the whole of that worst-case scenario, but it’s elements of it, and it’s the beginning of that risk side.”

 

 

Based on a report by The Telegraph  2025-03-29

 

 

[SLOWHAND225]

Oh noes !  lol

[JonnyF]

Nah. He and Rachel from accounts will use it as an excuse to raise taxes on working Brits.

[Chomper Higgot]

“There is increasing speculation that the UK might drop its digital services tax as part of negotiations. This levy, which imposes a 2 percent tax on revenues from search engines, social media platforms, and online marketplaces that benefit from British users, has been a longstanding point of contention with the US.”

 

Washington dictating UK taxation policies.

 

Reaction from the defenders of British sovereignty… crickets.

 

[stupidfarang]

Why do they tell everyone about their negotiation plans, do they not know the art of negotiation?

[spidermike007]

As an American I am hopeful that nations around the world will retaliate in a severe manner. Trump richly deserves this for his ridiculously dumb trade policies, deportation of folks who have been legally living within the US for decades, and the locking up of folks who have legal visas and we're locked up for simply trying to enter the US. He's pushing too hard, he's moving too fast, and he's becoming extremely reckless in the process, and diminishing American influence by the day.

 

This fool has to be stopped. The US deserves this for electing that absolute fool. The pushback will be long-term and America will diminish in the eyes of the world. Trump is a goon, let's all start admitting that truth. 

[Kinok Farang]

I bet America is shiiting itself.

[retayl]

3 hours ago, Kinok Farang said:

I bet America is shiiting itself.

Nah. Cult members are too dumb to see what’s coming.

[johng]

2 minutes ago, retayl said:

Nah. Cult members are too dumb to see what’s coming.

What's coming if Trump can stick to his guns and pull it off is a new renaissance...not just for America but the whole world.

[rickudon]

On 3/29/2025 at 6:16 PM, johng said:

What's coming if Trump can stick to his guns and pull it off is a new renaissance...not just for America but the whole world.

You mean a new dark age - at least for the rest of us. And if Trump doesn't pull it off?

[johng]

9 hours ago, rickudon said:

if Trump doesn't pull it off?

Then it's the same old same old as before.

[JonnyF]

The melt Starmer wouldn't last 5 minutes in a negotiation with Trump and Vance.

 

Especially if "Mastermind" DEI Lammy was his backup. 

 

Better Keir sticks to picking on working class Brits.  

[stupidfarang]

On 3/29/2025 at 6:16 PM, johng said:

What's coming if Trump can stick to his guns and pull it off is a new renaissance...not just for America but the whole world.

A new renaissance where every other country starts to work together, America cannot be trusted as a friend, time to ditch the USA and create new stronger markets in Europe, Asia, Africa, Canada and south America.

[RayC]

1 hour ago, JonnyF said:

The melt Starmer wouldn't last 5 minutes in a negotiation with Trump and Vance.

 

Especially if "Mastermind" DEI Lammy was his backup. 

 

Better Keir sticks to picking on working class Brits.  

 

Unlike the flat earth brigade (ERG), who stuck their heads in the sand and erroneously insisted that 'they need us more than we need them', during the Brexit negotiations, Starmer realises that he doesn't have much of a hand and that he needs to be careful how he plays it.

[BritManToo]

1 hour ago, stupidfarang said:

A new renaissance where every other country starts to work together, America cannot be trusted as a friend, time to ditch the USA and create new stronger markets in Europe, Asia, Africa, Canada and south America.

Does anyone really need friends that only take!

Europe, Asia, Africa, Canada and south America ...... all deadbeats with their hands out.

[JonnyF]

2 hours ago, RayC said:

 

Unlike the flat earth brigade (ERG), who stuck their heads in the sand and erroneously insisted that 'they need us more than we need them', during the Brexit negotiations, Starmer realises that he doesn't have much of a hand and that he needs to be careful how he plays it.

 

Yes, he certainly ensured he didn't have much of a hand when he and his future cabinet called the future POTUS a rascist KKK Nazi sympathizer.

 

DEI Lammy isn't the sharpest tool in the shed. He has the foresight of a bat wearing a Kevlar sleep mask.