The UK reserves the right to respond to new US import tariffs, Prime Minister Sir Keir Starmer has said, following Donald Trump’s decision to impose a 25% tax on UK-built cars.
The Prime Minister confirmed that his Government is in discussions with the White House to mitigate the impact of the levies, but insisted that Britain’s “national interest has to come first”.
Potential trade war looms
During a visit to Yorkshire, Sir Keir was asked whether the UK would respond with countermeasures. He made it clear that, while negotiations are ongoing, retaliation remains an option.
“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.”
The US is the second-largest export market for British cars after the European Union. Last year, 16.9% of UK car exports—more than 101,000 vehicles worth £7.6 billion—went to American buyers.
A balancing act for the government
Ministers have insisted on taking a pragmatic approach to the tariff threat, aiming to strengthen UK-US trade ties while avoiding a full-scale trade conflict.
Industry Minister Sarah Jones held a virtual meeting with automotive industry leaders on Friday to discuss the impact of the new duties.
A Government spokesperson later confirmed that the Minister had listened to concerns from car manufacturers, who expressed support for the UK’s diplomatic efforts.
“The US is an indispensable ally and one of our closest trading partners, with £1.2 trillion invested in each other’s economies.”
However, there is increasing concern about the long-term implications of the tariffs, with calls for a more aggressive UK response if negotiations fail.
Treasury minister: UK must take a different approach
On Thursday evening, Chief Secretary to the Treasury Darren Jones told BBC’s Question Time that the UK has to take a different stance compared to other nations when negotiating with the US.
“We have to take a different approach in Britain. Whether it’s on the debate on tax or the debate on tariffs, there is no easy answer.
If there was an easy answer, we would take it, obviously.
These are complicated issues, but we think we’re providing the right type of leadership in negotiating with the Americans.”
The 25% tariff on cars is part of a wider series of retaliatory measures, set to come into force on April 2, potentially including a 20% levy on UK goods in response to the British VAT rate.
Economic risks and industry reactions
Sir Keir’s reluctance to threaten reciprocal tariffs stems from fears that a UK-US trade war could severely damage the economy.
The Office for Budget Responsibility (OBR) has warned that a full-blown tariff dispute could shrink the UK’s GDP by 1% next year, jeopardising Chancellor Rachel Reeves’ plans to balance the country’s books.
Stock markets reacted swiftly to the tariff news. Shares in Aston Martin plummeted by 6% when trading began on Thursday morning, while Jaguar Land Rover (JLR)—which derives 22% of its sales from North America—could be one of the worst-hit UK car manufacturers.
Mike Hawes, CEO of the Society of Motor Manufacturers and Traders, called the decision “disappointing but not surprising”, urging both governments to negotiate a deal to avoid further economic harm.
Calls for stronger action
Despite the Government’s cautious approach, some politicians believe the UK should hit back with retaliatory measures.
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Liberal Democrat Treasury spokeswoman Daisy Cooper accused the Government of leaving the British car industry “at the mercy” of Trump’s policies.
“Our car industry is being left at the mercy of Trump and his destructive trade war.
We should be preparing to respond if needed, including through Tesla tariffs that hit Trump’s crony Elon Musk in the pocket.”
Meanwhile, Shadow Chancellor Mel Stride stressed the importance of securing a long-term trade deal with the US to protect UK businesses from future tariffs.
Impact on US carmakers
The tariff announcement has rattled global car markets, including American manufacturers, many of whom rely on imported parts.
On Wall Street, shares in General Motors fell by 6.8%, while Ford Motor Company dropped 2.6%.
Surprisingly, Tesla’s stock rose by 6.9%, despite CEO Elon Musk admitting that “the cost impact is not trivial” due to his firm’s reliance on overseas components.
What happens next?
As discussions continue between London and Washington, the UK faces a difficult balancing act—protecting its car industry without escalating tensions with a key trade ally.
With millions of pounds and thousands of jobs at stake, all eyes will be on whether Sir Keir Starmer’s government can secure a resolution—or if Britain will be forced to retaliate.
