Sir Keir Starmer has warned that even a breakthrough UK-US trade agreement or reductions in American tariffs will not be sufficient to safeguard Britain’s economic future. The Prime Minister said Britain must prepare for a new global economic order and explore wider international partnerships amid mounting uncertainty over the direction of US trade policy.
His comments follow the imposition of sweeping tariffs by Donald Trump, including a 10% blanket import tax on British goods. The UK Government is currently seeking to negotiate a resolution, but Sir Keir made clear that more comprehensive action is needed.
Speaking to ITV’s Peston, he said: “I don’t know whether the 10% rate will be permanent. We are negotiating and hope to improve the situation. But the idea that securing a deal or lowering a rate will be enough is, frankly, mistaken.”
“We’ve recognised in defence and security that the world has changed – and we must do the same for trade. That means coordinating more closely with European partners and thinking differently.”
Chancellor Rachel Reeves echoed that sentiment, stating the UK must look beyond Washington and strengthen ties with other global partners, notably the EU and India. She is due to travel to Washington later this month for IMF spring meetings, where she will push for progress on a UK-US deal.
The Chancellor also announced a £400 million package of agreements with India, including £128 million in new export deals. She said the Government is going “further and faster” to stimulate growth and secure Britain’s role in the global economy.
Meanwhile, global markets responded negatively to Trump’s widening tariffs. London’s FTSE 100 index fell by nearly 3%, closing at a 13-month low of 7,679.48. European markets followed suit, while the Dow Jones and S&P 500 both ended marginally lower.
Beijing responded to Trump’s tariffs on Chinese goods – which in some cases exceed 100% – by imposing retaliatory duties of up to 84% on US imports. The escalating trade tensions have added to fears of a global slowdown, with the Bank of England warning on Wednesday that risks to financial stability had grown.
Despite the turbulence, the Prime Minister insisted his Government would not waver from its fiscal discipline. “The fiscal rules were put in for a purpose, they’re ironclad and non-negotiable,” he said. “We’re acting in the national interest.”
The Government has so far resisted calls to retaliate against US tariffs, unlike the EU, which has prepared countermeasures. Ministers say they still hope to reach a “mutually beneficial” agreement with Washington.
However, concerns remain over the potential concessions Britain might make in such negotiations. Sir Keir has already ruled out compromising on the NHS and insisted that the UK’s digital services tax on tech giants must remain in place.
Culture Secretary Lisa Nandy added on Times Radio: “We will be firm in defending key British interests. But we also recognise that global dynamics have shifted – and we need to think about new strategies, not just old alliances.”
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Meanwhile, Conservative leader Kemi Badenoch took aim at Labour’s approach, warning: “We don’t need a deal that just gets us back to where we were last week. We need a trade deal that prepares us for the future.”
She added: “This is about mutual benefit – not tit-for-tat bargaining. Keir Starmer must make sure any agreement puts British workers and businesses first.”
The UK-EU summit scheduled for 19 May will be another key moment for the Prime Minister to “refresh the relationship”, according to Ms Reeves. “The war in Ukraine and the global trade climate make it all the more urgent that we deepen our ties with Europe,” she told The Financial Times.
As the world navigates a volatile economic landscape, the message from Downing Street is clear: bilateral deals with the US may be valuable – but they are only part of the wider strategy to future-proof Britain’s economy.
