**London**: Following the imposition of US tariffs, UK ministers aim for a measured response. With concerns over potential economic impacts, politicians including Sir Keir Starmer vary in their outlook, as the government considers strategies to mitigate the financial fallout and maintain trade appropriations.
In the wake of recent tariffs imposed by the United States, UK ministers are adopting a strategy of remaining “cool and calm” while they navigate the implications for the British economy. The US President, Donald Trump, has introduced tariffs ranging from 10% to 50% on goods from various countries, significantly affecting global markets. Following this announcement, the value of the US dollar fell by nearly 2%.
On Wednesday, Trump revealed that the UK would specifically incur a 10% “reciprocal” tariff, a move he claimed was met with approval by Labour leader Sir Keir Starmer. Speaking aboard Air Force One, Trump stated, “We have a very good dialogue. I think he was very happy about how we treated them with tariffs.” This assertion has been met with skepticism by UK officials, who express disappointment and concern regarding the tariffs and their potential impact on the economy.
In a speech delivered during a local campaign launch in Chesterfield, Sir Keir Starmer endorsed the notion that the world is entering a “new economic era.” He emphasised the need for a strategic response to the tariffs, indicating that it goes beyond a “short-term tactical exercise.” Starmer echoed sentiments of caution, acknowledging the economic challenges that could arise from Trump’s decisions.
Foreign Secretary David Lammy responded to Trump’s comments by expressing regret over the “return to protectionism” seen in the US, a stark contrast to the long-standing tradition of open trade. Lammy stated that the UK government is currently consulting with businesses to devise a strategy and that “all options are on the table” regarding retaliatory measures. He highlighted the need to prioritise the national interests of the British populace, who are likely to be concerned about the financial ramifications of these tariffs.
Amid these developments, the British Treasury reported a significant drop in the FTSE 100 index, which fell to a three-month low following the tariff announcement. The UK Government has prepared an “indicative list” featuring products that could potentially be subjected to retaliatory action, such as bourbon whiskey, motorcycles, guitars, and jeans. However, Trade Secretary Jonathan Reynolds has indicated that a comprehensive review of counter-measures will take place over the next four weeks before any decisive actions are taken.
A forewarning from economic experts suggests that the tariffs may have considerable implications for the UK’s economic growth, which is already projected at a modest 1% for the year. Early predictions suggest that this might decline by up to 0.5 percentage points due to the new tariffs. Thomas Pugh, an economist at RSM UK, indicated that these tariffs could effectively negate Chancellor Rachel Reeves’s fiscal headroom, presenting her with the potential necessity for increased spending cuts or tax hikes should the economic conditions warrant such actions.
As the international economic landscape shifts dramatically, the UK government continues to pursue discussions with the US aimed at securing exemptions from the aggressive tariff regime, with Starmer committing to “fight for the best deal for Britain” in these negotiations. While the immediate effect of Trump’s announcement has sent shockwaves across stock markets globally, the long-term economic repercussions remain to be fully assessed as the UK endeavours to stabilize its fiscal outlook in this new era of trade relations.
Source: Noah Wire Services
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