Trump tariffs latest: Starmer insists UK ‘ruling nothing out’ as president prepares to spark global trade war

The UK would not be “out of the woods” on tariffs even if it could secure an economic deal with the United States, the Chancellor has told MPs.

Rachel Reeves told the Commons Treasury Committee that 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.

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.”

Chancellor Rachel Reeves says the UK will not jeopardise the possibility of an economic deal with Donald Trump’s US by “posturing” in response to the president’s tariffs, which are set to hit British exports.

She told MPs she had been speaking to exporters who did not want a rushed response.

She said: “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.”

The FTSE-100 has closed for the day down 0.52 per cent – a drop, but not as dramatic as it might have been after edging towards double that distance around midday, writes business editor Karl Matchett.

Similarly, the CAC 40 in France and German DAX ticked upwards in the last hour or two but still finished in negative territory, the latter down 0.8 per cent for the day.

All eyes now turn to the US and what their domestic markets do ahead of Mr Trump’s announcements tonight. The S&P 500, the Dow and the Nasdaq are all trading up between 0.4 and 0.5 per cent so far.

As to what that actually means for tonight and how the markets react after closing is still anyone’s guess at this point, but by the time the London Stock Exchange opens in the morning, investors and companies alike will have started to digest the impact of the president’s words, the size of the new tariffs – and just how much they might each be affected by them.

Rachel Reeves has argued that US tariffs on the UK would be “less relevant” to the UK than global tariffs.

The chancellor told the Treasury Committee today: “Obviously we are looking ourselves at a whole range of scenarios and preparing for all different eventualities.”

She continued: “The biggest impact comes from global tariffs, not just UK. The next biggest comes from retaliation. Actually the specific tariffs on the UK are less relevant on growth and inflation impact than global impact.”

She added: “Even if we are able to secure an agreement with the US, that we very much want to achieve and are working hard to achieve, even if that’s possible, that doesn’t mean we are out of woods and not impacted by tarriffs.”

Our political columnist Andrew Grice writes:

When Donald Trump confirms that he is imposing tariffs on imports from the UK, it will appear to be a huge setback for Keir Starmer. Yet, the prime minister can still turn a diplomatic defeat into victory.

Until recent days, Starmer had high hopes of freeing the UK from the worst effects of Trump’s “Liberation Day.” A hastily struck US-UK “economic prosperity deal,” based on advanced technology and services, was ready to go and would have given the UK a carve-out from most Trump tariffs, UK officials told me.

It would have been a coup for Starmer. Instead, his softly softly strategy on Trump will now be called into question – both at home, where he will be accused of not standing up to the US president, and abroad, where natural allies like the EU and Canada will urge the UK to join their retaliation against the US.

At some points during the hasty negotiations, US officials hinted they were happy with the outline deal on the table. But the only view that mattered was Trump’s, and even his closest advisers didn’t know which way he would jump.

As ever, events are more about Trump’s vanity than the eventual outcome. This is surely why he didn’t sign off on the UK agreement. “He wanted his ‘shock and awe’ moment,” one Whitehall source told me.

Read more insights here with Independent Premium:

Rachel Reeves has warned “it would not be the right policy to increase tariffs on us” as she is questioned over Donald Trump’s tariffs.

The chancellor told the Treasury Committee today: “I do recognise the concerns the US has, their concerns are about a global trade imbalance… The UK is not cause of those problems… So it would not the right policy to increase tariffs on us.”

Rachel Reeves has insisted that “talks are ongoing” with the US as she is grilled over the prospect that Donald Trump’s tariffs are soon to be imposed on the UK.

Answering questions before parliament’s Treasury Committee, the chancellor also said: “I do believe in free trade. The UK has balanced trade with the US. When our prime minister Sir Keir Starmer was in Washington meeting with president Trump, they agreed to start a rapid dialogue on an economic agreement. That work is ongoing at the moment. We do not want to see trade barriers go up. Indeed we want to see trade barriers fall.”

Our data correspondent Alicja Hagopian has created this interactive map showing how countries around the globe are likely to be impacted by Donald Trump’s tariffs.

Read more details about the anticipated global impact of the looming US import taxes in this report:

The lack of clarity on which tariffs the US could impose ahead of Donald Trump’s announcement tonight is intensifying analysts’ and policymakers’ anxiety over what may lie ahead.

“I can’t recall a situation where the stakes were this high and yet the outcome was so unpredictable,” Steve Sosnick, chief strategist at Interactive Brokers, told Reuters.

“The devil is going to be in the details and nobody knows the details.”

Donald Trump’s tariffs will be negative for all, the president of the European Central Bank has warned.

“It will be negative the world over and the density and the durability of the impact will vary depending on the scope, on the products targeted, on how long it lasts, on whether or not there are negotiations,” Christine Lagarde told Irish radio broadcaster Newstalk.