Ministers anticipate that Britain may face additional tariffs when Donald Trump reveals his latest round of trade barriers this Wednesday, an event the US president refers to as “liberation day.”
On Sunday evening, Keir Starmer conversed with Trump, which Downing Street characterized as part of “productive negotiations” aimed at reaching a deal. A spokesperson for No 10 stated that both leaders had agreed to advance talks between the two parties “at pace this week,” adding: “They committed to remaining in contact over the coming days.”
High-ranking government officials have been involved in intense negotiations in recent weeks as they rush to finalize a trade deal with the US, which could prevent the UK from being included in the announced measures.
The consequences could be significant for the British government; analysts predict that a 20 percentage point rise in tariffs on UK goods and services could shrink the British economy by 1%, pressuring Chancellor Rachel Reeves to raise taxes this autumn.
However, officials now express concerns that a deal may not be finalized in time, sources have informed the Guardian, and they are preparing for the potential impacts of what Trump will declare on April 2.
Nevertheless, ministers will persist with negotiations after this deadline, hoping to mitigate adverse effects on UK economic growth by reaching an agreement to lower tariffs even after they have been indicated.
A Whitehall official stated to the Guardian: “We have been diligently working behind the scenes for some time on an economic agreement, and our efforts are ongoing. However, we do not view Wednesday as an absolute deadline.”
Another source mentioned: “If we don’t finalize a deal by Wednesday, it’s not the end of the world. The priority is to ensure we secure a deal from the US that is worthwhile.”
Trump has indicated that he will announce what he claims are “reciprocal” tariffs on trading partners globally on Wednesday. Last week, he revealed plans to impose a 25% tariff on car imports to the US starting on April 2, which would impact British manufacturers like Bentley and Aston Martin.
However, as the larger announcement approaches, even White House officials admit they have limited knowledge about which tariffs the president plans to impose, on which countries, and at what rates.
British negotiators, led by Business Secretary Jonathan Reynolds, have been in discussions with their US counterparts for several weeks to establish a technology-focused trade agreement, hoping to exempt the UK from the most severe of Trump’s tariffs. Downing Street officials, including the Prime Minister’s head of international economic affairs, Michael Ellam, and his business consultant Varun Chandra, are actively involved in the discussions.
In a sign of the extent to which the British government is willing to proceed with the deal, ministers have proposed eliminating the UK digital services tax (DST). The DST is a levy imposed on the revenues of the largest tech companies worldwide—most of which are US-based—and is expected to generate £1.1 billion by the decade’s end.
Nevertheless, British officials are growing increasingly pessimistic about the likelihood of securing the deal within the next three days, though they still hope for a last-minute breakthrough.
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“This is an unpredictable scenario with an equally unpredictable administration,” one source remarked. “We have to strategize for every possible outcome.”
If the Trump administration decides to include the UK in its Wednesday announcement, Britain is unlikely to respond with its own tariffs, according to individuals familiar with the government’s perspective. They contended that doing so would jeopardize the potential for a future agreement.
One individual stated: “All options are on the table. However, unlike other trading allies such as the EU, our approach will remain calm and focused on dialogue. We understand that the British industry does not wish to provoke a trade war.”
This approach, however, has faced scrutiny in recent days. Kim Darroch, the former British ambassador to the US, advised in the Observer on Sunday: “[UK ministers] should be cautious not to give Trump victories; tariffs are his go-to leverage, and he’ll employ them repeatedly if he sees them effective.”
Others argue that ministers have little choice but to keep negotiating. Crawford Faulkner, who resigned in January as the UK’s chief trade negotiator, asserted on Sunday that Britain should be “prepared to negotiate” regarding the DST and other matters.
He communicated during an interview with Times Radio: “There is no reason why the United Kingdom could not achieve overall liberalization in goods, and as extensively in services as is feasible, with the United States.”
