Prime Minister Keir Starmer‘s plans for revitalizing the UK economy and fostering closer international trade ties hit a roadblock this week as former US President Donald Trump, now campaigning for re-election, declared that “baseline” tariffs on imports—including those from the UK—would remain in place if he returns to office. This announcement threatens to complicate ongoing negotiations for a post-Brexit UK-US trade deal, a centerpiece of Labour’s foreign economic strategy.
The “Liberation Day Tariffs,” as Trump calls them, impose a 10% universal import duty and additional country-specific levies. While the UK has avoided the highest bracket, the continuation of baseline tariffs could damage UK industries that depend on transatlantic trade. As trade talks hang in the balance, so does the economic optimism Labour had hoped to build heading into the next general election.
Trump’s Tariff Announcement
Details of the Baseline Tariffs
President Trump’s updated economic stance includes a 10% universal tariff on all imports into the US as part of his “America First 2.0” platform. This policy targets trade imbalances and seeks to protect American manufacturing. Although not directly aimed at the UK, the effect is tangible and widespread.
In sectors like automotive, steel, and pharmaceuticals, British exporters are already feeling the impact. Under this new trade environment, British cars exported to the US could face additional 25% import duties, a move that industry experts fear may devastate manufacturing hubs in the Midlands.
Impact on UK Exports
For British exporters, particularly small and medium-sized enterprises (SMEs), the imposition of tariffs significantly raises the cost of doing business in the US. Industries like steel—already battered by global price fluctuations—and the pharmaceutical sector, which thrives on transatlantic clinical supply chains, face a sudden surge in expenses.
Chancellor Rachel Reeves recently visited Washington to negotiate exemptions or reductions in these tariffs. However, Trump’s uncompromising position suggests the UK may have to concede more in other areas, such as digital services taxation or agricultural standards, to see any meaningful progress.
Starmer’s Trade Strategy
Efforts to Secure a Trade Deal
Since taking office, Starmer has emphasized repairing Britain’s global trade relationships post-Brexit. A trade agreement with the United States, the UK’s largest non-EU trading partner, would be a major win—both politically and economically. Labour’s strategy has focused on diplomatic re-engagement, promoting British industries, and policy realignment with US economic priorities.
Starmer hoped that aligning more closely with US views on digital regulation, climate investment, and AI governancemight sweeten negotiations. However, this latest setback could reduce leverage for the UK and weaken Labour’s narrative of “global Britain reborn.”
Challenges Faced in Negotiations
Labour’s team faces a uniquely complex geopolitical backdrop. Trump’s proposed tariffs are not just economic tools—they’re also political signals meant to galvanize his support base with tough-on-trade rhetoric. This means that any UK diplomatic outreach may be hindered not by lack of effort but by US electoral strategy.
Internally, Starmer must also navigate pressure from British farmers and manufacturing unions who fear being undercut by US imports, should the UK lower its own tariffs or standards in a deal.
Economic Implications for the UK
Affected Industries
Key sectors like automobiles, steel, agri-food, and biotech are at risk. The 25% auto tariff hits British car makers hard—especially those exporting to US dealerships. Meanwhile, steel manufacturers who hoped for a post-Brexit rebound through global markets now face shrinking competitiveness in the world’s biggest economy.
Also feeling the heat is the pharmaceutical sector. British pharma companies rely heavily on access to the US for both distribution and regulatory partnerships. With profit margins already tight, a 10% baseline tariff could discourage investment and stall innovation pipelines.
Potential Economic Consequences
Without a compromise, the UK risks facing not just economic stagnation but strategic isolation. Higher tariffs could discourage US investment, reduce UK export volumes, and stall Labour’s post-Brexit recovery narrative.
Analysts warn this could also affect the value of the British pound, foreign investor sentiment, and the UK’s position in trade blocs like CPTPP and its ambitions to negotiate favorable bilateral agreements elsewhere.
Political Repercussions
Domestic Political Response
Opposition voices in Parliament are already seizing on the tariffs as proof that Starmer’s diplomatic gamble has backfired. The Conservative Party has criticized the Labour government for being too eager to compromise without securing tangible gains in return.
Industry associations are also ramping up their lobbying efforts, demanding clarity and compensation plans. As voters prepare for the next general election, Labour must convince the public that their economic diplomacy is still on track.
International Trade Relations
This move also sets a precedent for future UK trade negotiations. Other nations may adopt similar hardline tariff postures, seeing the UK as a vulnerable and isolated actor post-Brexit. Meanwhile, countries like Canada, Japan, and Australia may use the UK’s struggles with the US as leverage in their own deals.
Experts say the UK’s trade credibility is on the line, and the longer tariffs remain unresolved, the greater the risk of long-term diplomatic and economic fallout.
