British Jobs at Risk from President Trump's Trade War

UK Prime Minister warns of 'economic impact' from 'limited' 10% tariff on UK with cars, steel, pharma and fashion firms facing pain as stock markets slide

By JAMES TAPSFIELD

April 4, 2025

Keir Starmer warned of an 'economic impact' from President Donald Trump's extraordinary trade war today with tens of thousands of British jobs at risk.

The PM admitted pain is looming as he met business leaders in Downing Street, including AstraZeneca's Pascal Soriot, BAE's Charles Woodburn and Jaguar Land Rover's Richard Molyneux.

Sir Keir pledged to 'fight' for a wider trade deal with the US to get rid of the tariffs - 10 per cent for the UK, plus 25 per cent on car and steel imports - although he stressed that would not be secured at any cost.

He said 'decisions we take in coming days and weeks will be guided only by our national interest, in the interests of our economy, in the interests of businesses around this table, in the interests of putting money in the pockets of working people'.

'Nothing else will guide me, that is my focus,' he said. 'Clearly, there will be an economic impact from the decisions the US has taken, both here and globally.

'But I want to be crystal clear: we are prepared, indeed one of the great strengths of this nation is our ability to keep a cool head.'

A senior No10 source has stressed 'no tariffs are good' but suggested the relatively low number for Britain 'vindicated' the government's approach.

Sir Keir had already acknowledged that his desperate efforts to secure an exemption from President Trump would be snubbed, despite their warm meeting in the Oval Office.

Markets are braced for a stormy ride after President Trump's 'Liberation Day' announcements sparked a bloodbath in Asia, with fears of a global trade meltdown crushing growth and ramping up inflation.

The FTSE 100 Index dropped 122.4 points or 1.4 per cent to 8486.09 in the first few minutes after opening.

President Trump imposed 10 per cent tariffs on the UK - but hit other major economies much harder.

The president also confirmed there will be a 25 per cent tariff on all foreign-made cars, in another blow for Britain that experts have warned could cost 25,000 jobs.

Industry bodies said the news was a 'blow' and 'deeply disappointing', with some suggesting emergency bailouts will be needed.

Despite the lower level of tariffs, billions of pounds of exports to America by businesses are potentially affected, with fears thousands of jobs are on the line. Steel and aluminium imports are already facing 25 per cent tariffs.

Tokyo's Nikkei led an Asian sell-off, collapsing more than four per cent, while US futures plunged. Hong Kong, Sydney, Seoul, Manila and Bangkok gave up more than one per cent.

There were also losses in Shanghai, Singapore, Wellington and Mumbai.

Safe haven gold hit a record high and the yen jumped one percent amid worries that retaliation will send the crisis spiraling.

The dollar also slid globally against most currencies including the pound and the euro, making imports more expensive but also making US exports more attractive to consumers.

Stephen Innes of SPI Asset Management said:

'President Trump walked into the Rose Garden and detonated the most aggressive trade shock the market's seen in decades. This isn't a jab - it's a full-on haymaker.'

Keir Starmer admitted pain is looming as he met business leaders in Downing Street today

Holding up a chart with a list of targets, President Donald Trump said the UK will face 10 per cent tariffs, and the EU will face more pain at 20 per cent. China will be battered with 34 per cent, and Japan 24 per cent.

Business chiefs in No10 today included AstraZeneca 's Pascal Soriot, BAE's Charles Woodburn and Jaguar Land Rover's Richard Molyneux

The Japanese Nikkei fell off a cliff as it opened following President Trump's tariffs blitz.

Futures tracking the Nasdaq - the technology heavy index - fell by as much as 3.3 percent as President Trump spoke in the White House Rose Garden.

S&P 500 futures dropped heavily too, by more than two percent. Wall Street is worried that tariffs will slow growth, boost inflation.

President Donald Trump confirmed that the UK will not escape the pain of levies he claims will restore 'fairness' in global trade.

The first of eight pages of reciprocal tariffs that the White House announced during Wednesday's event in the Rose Garden.

The president's launch event was titled 'Make America Wealthy Again'.

Holding up a chart with a list of tariffs being implemented from 5am on Saturday UK time, President Trump said the EU will face more pain at 20 per cent.

China will be battered with 34 per cent, and Japan 24 per cent. Cambodia and Vietnam are both nearing 50 per cent, while no other G7 nation has 10 per cent.

In an omission that immediately raised eyebrows, Russia was not on the roster at all.

President Trump said so-called 'Liberation Day' would be remembered as 'the day American industry was reborn', claiming there had been too much 'plunder' by other countries.

Watched by his Cabinet and blue-collar workers in the White House Rose Garden, he said he wanted to raise 'trillions and trillions of dollars' and start a new 'golden age'.

President Trump said the tariff being imposed on UK imports was equivalent to that faced by US exports.

However, most other countries will be charged 'about half' of their own tariffs.

However, there are fears a full-blown global trade war is brewing - with the EU, China and other major powers considering their options.

Within minutes of President Trump's announcement, futures tracking America's flagship S&P 500 fell two per cent, while the Nasdaq dropped three per cent — the kind of falls not seen since the start of the pandemic.

The measures are deeply divisive in the US, with condemnation from Democrats who argue they will only drive inflation.

President Trump appeared to have deliberately waited until markets were closed to make his announcement.

The US dollar dropped sharply against key currencies as he began his speech, but clawed back some ground.

President Trump swiped at 'exorbitant VAT taxes' in his speech - even though it is a general sales duty not targeted at imports.

He also jibed at 'non-monetary barriers', suggesting that obstacles such as bans on chlorinated chicken could be an issue in trade talks.

The president said he blamed his predecessors in the White House, rather than other nations for alleged trade imbalances, but added that 'friends' were often worse than 'foes'.

President Trump said he was drawing a line under 'unilateral economic surrender', and the US could be 'rich'.

'In a few moments I will sign a historic executive order instituting reciprocal tariffs on countries throughout the world,' he said.

'Reciprocal. That means they do it to us and we do it to them.

Very simple, can't get any simpler than that.

'This is one of the most important days in my opinion in American history. It's our declaration of economic independence.'

The president insisted:

'For decades, the United States slashed our trade barriers on other countries while those nations placed massive tariffs on our products and created outrageous non-monetary barriers to decimate our industries.

'And in many cases, the non-monetary barriers were worse than the monetary ones.

'They manipulated their currency, subsidised their exports, stole our intellectual property, imposed exorbitant VAT taxes to disadvantage our products, adopted unfair rules and technical standards and created filthy pollution havens.

'They were absolutely filthy, but they always came to us and they said we're violating we should pay for it.'

Talking about the tariffs he is about to put on other nations, President Trump told the White House press conference:

'We will charge them approximately half of what they are and have been charging us. So the tariffs will not be a full reciprocal.

'I could have done that, yes. But it would have been tough for a lot of countries.'

President Trump said:

'I don't blame these other countries at all. I blame former presidents and past leaders.

'They let it happen to an extent that nobody can even believe,' he said in a speech at the White House.'

Businesses voiced alarm at the bombshell dropped by the president, while accepting that it could have been worse for the UK.

The Society of Motor Manufacturers and Traders Ltd (SMMT) described the imposition of tariffs as 'deeply disappointing'.

Mike Hawes, SMMT chief executive, said:

'The announced imposition of a 10 per cent tariff on all UK products exported to the US, whilst less than other major economies, is another deeply disappointing and potentially damaging measure.

'Our cars were already set to attract a punitive 25 per cent tariff overnight and other automotive products are now set to be impacted immediately.

While we hope a deal between the UK and US can still be negotiated, this is yet another challenge to a sector already facing multiple headwinds.

'These tariff costs cannot be absorbed by manufacturers, thus hitting US consumers who may face additional costs and a reduced choice of iconic British brands, whilst UK producers may have to review output in the face of constrained demand.'

UK Steel director general, Gareth Stace, said: 'Three weeks ago, President Trump delivered a cataclysmic strike to UK steel exports for US manufacturers.

'The new 10 per cent tariffs, stacked on top of the existing 25 per cent levies, are not only sticking the knife in again, but this time turning it in the wound for maximum effect.

'The UK Government must continue its efforts to strike a deal with the US, but we recognise that this requires willingness from both sides.

Domestic trade policy on the other hand is entirely within the Government's gift and it can immediately take action to strengthen our trade defenses.

'We cannot afford to wait any longer as our exports are being damaged, and our market is being undercut by rising imports.

UK Steel has warned that the steel crisis has been deepening for some time and bold, decisive and significant interventions are needed now.'

Rain Newton-Smith, chief executive of the CBI said:

'Business has been clear: there are no winners in a trade war. Last night's announcements are deeply troubling for businesses and will have significant ramifications around the world.

'A cool and calm reaction from the UK Government is the right response: UK firms need a measured and proportionate approach which avoids further escalation. Retaliation will only add to supply chain disruption, slow down investment, and stoke volatility in prices.'

The Federation of Small Businesses (FSB) said 59 per cent of small UK exporters currently sell into the US market, suggesting emergency support will be needed.

'Tariffs will cause untold damage to small businesses trying to trade their way into profit while the domestic economy remains flat,' Tina McKenzie, the FSB's policy chair said.

Business Secretary Jonathan Reynolds said the US 'is our closest ally' and ministers would 'remain calm and committed' to reaching agreement.

In a statement following the announcement, he said:

'The US is our closest ally, so our approach is to remain calm and committed to doing this deal, which we hope will mitigate the impact of what has been announced.

'We have a range of tools at our disposal and we will not hesitate to act. We will continue to engage with UK businesses including on their assessment of the impact of any further steps we take.

'Nobody wants a trade war and our intention remains to secure a deal. But nothing is off the table and the Government will do everything necessary to defend the UK's national interest.'

President Trump read many of the tariffs off the chart during the rambling press conference.

The president gave a long and wide-ranging speech as he laid out his philosophy on trade

Shadow trade secretary Andrew Griffith described the tariff announcement as 'disappointing news' and suggested that Brexit spared the UK from higher import taxes.

He called on the Government to 'agree a fair deal' with the US for the benefit of businesses and consumers.

In a statement, Mr Griffith said:

'This is disappointing news which will worry working families across the country.

'Labour failed to negotiate with President Trump's team for too many months after the election, failed to keep our experienced top trade negotiator, and failed to get a deal to avoid the imposition of these tariffs by our closest trading partner.

'The Chancellor's emergency budget of just a week ago with its inadequate headroom is now at risk, casting uncertainty about more taxes or spending cuts. Sadly, it is British businesses and workers who will pay the price for Labour's failure.'

He added: 'The silver lining is that Brexit, which Labour ministers voted against no less than 48 times, means that we face far lower tariffs than the EU: a Brexit dividend that will have protected thousands of British jobs and businesses.'

Chancellor Rachel Reeves acknowledged this afternoon that the UK will not be 'out of the woods' even if it can get exemptions.

Ms Reeves said the main impact on the economy would be from 'global tariffs' rather than UK-specific ones, thanks to depressed demand and higher inflation in other countries.

She said: 'I think that's really important to understand, because even if we are able to secure an economic deal with the United States – which we very much want to secure and are working hard to secure that – even if that's possible, (it) doesn't mean somehow that we are out of the woods and not impacted by tariffs.

'So we don't just want to see an agreement between the UK and the US, we want to see free trade, fair trade continue.'

Ms Reeves insisting the Government would not be 'posturing' in search of a 'quick headline'.

The Chancellor - whose Spring Statement spending plans are already at threat of being torched - said she had been talking to UK exporters who urged against a rushed response.

Ms Reeves told the Commons Treasury Committee: 'We don't want to be posturing here, the prize on offer is a good economic agreement between us and the United States'.

'We are not going to do anything to put that in jeopardy, we are not going to rush into action to get a quick headline.'

At PMQs, Sir Keir said the Government has 'prepared for all eventualities' and is working with companies likely to be hit by the tariffs.

He told MPs: 'A trade war is in nobody's interests and the country deserves – and we will take – a calm, pragmatic approach.

'That's why constructive talks are progressing to agree a wider economic prosperity deal with the US.

'That's why we're working with all industries and sectors likely to be impacted.

'Our decisions will always be guided by our national interest, and that's why we have prepared for all eventualities, and we will rule nothing out.'

The imposition of wider tariffs will make a range off British goods more expensive in the US, which is likely to reduce demand.

The UK could also becomes a destination for imports diverted from the US due to the high cost, potentially flooding the market and hitting domestic producers.

Economists at the Office for Budget Responsibility have warned that US tariffs could eliminate Ms Reeves's 'headroom' against her day-to-day spending plans, requiring her to make more cuts or hike taxes to meet the rules she has set herself.

The tariffs could knock up to 1 per cent off the size of the UK economy if there is a full-blown trade war with the UK retaliating to President Trump's measures.

Chancellor Rachel Reeves acknowledged this afternoon that the UK will not be 'out of the woods' even if it can get exemptions.

Analysis from the Institute for Public Policy Research (IPPR) suggested tariffs on car imports would put 25,000 UK jobs at risk and 'completely destabilise the UK car manufacturing industry'.

UK negotiators are pursuing an economic agreement with the US focused on technology.

Such a deal could include possible changes to the digital services tax – which imposes a 2 per cent levy on the revenues of several major US tech companies – in exchange for a carve-out from the tariffs.

Sir Keir did not deny that changes to the digital services tax are being considered.

Easing access for US agricultural products to UK markets could also be on the table, although officials have insisted that food standards will not be lowered.

One in eight cars built in the UK is exported to the US, leaving the sector especially exposed to President Trump's tariffs.

Rolls-Royce relies heavily on the US as a source of demand for its engines, exporting around a quarter of its new models to America last year

In the last financial year, Burberry's North American sales amounted to £603million, 20 per cent of total turnover.

The importance of the US to the brand is reflected in the appointment of an American – Joshua Schulman – to the post of chief executive last summer.

Burberry, which makes some of its coats in Yorkshire, is not the only British brand close to the hearts of American luxury lovers.

Others include Mulberry, 40 per cent of whose handbags are manufactured in Somerset, and Watches of Switzerland which, despite its name, is a British company with stores in the US.

Other smaller businesses include Smythson, the stationery group and small craft furniture firms whose bespoke output adorns uptown Manhattan penthouses.

Walpole, the British luxury goods trade body, says that North America is one of the biggest global markets for our upmarket brands, representing 24 per cent of exports of such items.

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