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The UK reserves the right to respond to American tariffs, Sir Keir Starmer has said, after US President Donald Trump’s decision to slap a 25 per cent import tax on cars.
The Prime Minister said his government was involved in ongoing discussions with the White House aimed at “mitigating the impact” of any levies but that ultimately “our national interest has to come first”.
The US is the second largest export market after the European Union (EU) for cars built in the UK.
Asked whether the UK reserves the right to respond to tariffs during a visit to Yorkshire, he said: “Yes, of course. 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 United States 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.”
Carmakers meeting
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 £7.6bn.
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”.
The import tax on cars is on top of a series of reciprocal tariffs set to come into effect on April 2, which could include a general 20 per cent levy on UK products in response to the VAT rate.
Sir Keir’s reluctance to hit back with the threat of reciprocal tariffs is driven by fears of the economic harm a trade war would cause.
‘Destructive trade war’
The budget watchdog warned a full-blown tariff war with the US could wipe one per cent off gross domestic product next year and derail Chancellor Rachel Reeves’ hopes of balancing the books, forcing her to implement more cuts or tax hikes.
That “worst-case scenario” would come about if Trump imposed 20 per cent tariffs on British goods and the UK reciprocated in kind.
It comes as shares in UK luxury carmaker Aston Martin dropped by six per cent when stock markets opened on Thursday morning. Jaguar Land Rover could be one of the UK vehicle manufacturers most affected by tariffs, with some 22 per cent of sales last year to the US.
Mike Hawes, chief executive of industry body the Society of Motor Manufacturers and Traders (SMMT), said the announcement of tariffs was “not surprising but, nevertheless, disappointing” and he urged both governments to strike a deal that avoids further damage.
Lib Dem Treasury spokeswoman Daisy Cooper called for the UK to be ready to hit back, arguing: “Our car industry is being left at the mercy of Trump and his destructive trade war.”
