The UK would require an “extraordinary deal” to secure a reduction in the 10% tariff imposed by Donald Trump’s administration, according to one of the US President’s senior economic advisers – casting fresh doubt over Downing Street’s hopes of reaching a favourable economic agreement with Washington.
Sir Keir Starmer’s Government remains hopeful that a deal can be struck with the United States to ease the impact of the wide-reaching tariffs which have rocked global trade markets in recent weeks. However, Kevin Hassett, a key economic voice within the Trump camp, has indicated that anything less than an exceptional agreement will fail to lower the baseline tariff now applied to most trading partners.
“I think everybody expects that the 10% baseline tariff is going to be the baseline,” Mr Hassett told CNBC. “It is going to take some kind of extraordinary deal for the president to go below there.”
The 10% tariff has been framed by the White House as a “standard protective measure” and replaces the previously imposed, more erratic “retaliatory” tariffs that had caused panic on global markets. The recent move to temporarily pause the harsher tariffs has brought some relief, with London’s FTSE 100 seeing modest recovery following weeks of volatility. However, the broader concern remains: the UK, like many other nations, is now caught in a high-tariff trading environment with its closest non-EU ally.
Sir Keir Starmer, speaking during a visit to a manufacturing facility in Birmingham, insisted that dialogue with the US remains ongoing at the highest levels. “We’re speaking to President Trump’s team every single day,” he said. “The idea that our calls are being ignored is simply false.”
He also defended his Government’s strategy of not retaliating with equivalent tariffs. “I don’t think having a strong relationship with the US has given us no advantage whatsoever,” the Prime Minister stated. “We’re continuing discussions to mitigate the impact of tariffs, and at this stage, no business sector is asking us to leap into a trade war.”
Chancellor Rachel Reeves is due to travel to Washington at the end of April for the International Monetary Fund’s spring meeting, where she plans to raise the tariff issue directly with her US counterparts. A UK-EU summit scheduled for 19 May is also being viewed as an opportunity to reinforce Britain’s broader trade strategy, including post-Brexit alignment with Europe in selected sectors.
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Despite the UK’s measured approach, Trump’s trade policy continues to cause global ripples. The president announced a 90-day pause on high tariffs affecting countries like Japan and members of the EU, citing growing economic concerns and what he referred to as “people getting yippy” – a remark widely interpreted as a response to mounting pressure from Wall Street and foreign governments.
However, relations with China remain icy. Mr Trump confirmed this week that tariffs on Chinese imports would be increased to a staggering 125%, escalating a long-running trade war with Beijing. Chinese officials have vowed to “fight to the end”, raising fears of further economic instability in Asia and beyond.
The impact of Trump’s global trade stance was visible on Asian markets in the early hours of Friday morning, as Japan’s Nikkei index plunged by 5.4% amid renewed investor uncertainty.
As the Starmer Government seeks to stabilise Britain’s post-Brexit economy and secure favourable trade ties beyond Europe, the road to a bespoke deal with the Trump White House looks increasingly steep. Whether “extraordinary” concessions – or clever diplomacy – can unlock a better tariff arrangement remains to be seen. For now, businesses across the UK will be watching negotiations closely, hoping that the current 10% blow does not become a lasting economic burden.
