The prime minister has been urged to adopt a “united front” alongside Europe and Canada as a trade war with the United States looms.
It comes as Donald Trump prepares to unleash his so-called “liberation day” tariffs on Wednesday, with none of America’s major trading partners expected to emerge unscathed.
The White House has reportedly drafted a proposal for the US to impose tariffs of about 20 per cent on most imports to the world’s largest economy.
Downing Street conceded earlier this week that it is almost certain that the US administration will include Britain in a new wave of reciprocal global tariffs.
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The business and trade secretary, Jonathan Reynolds, has expressed his hope the UK can secure a trade deal with the US to mitigate the impact of the tariffs. But weeks of trade talks and diplomatic overtures have failed to produce a result.
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Commenting ahead of “liberation day”, the Liberal Democrats are arguing that “cosying up” to Trump has not worked, urging the government instead to push for a “united front” with Commonwealth ally Canada and Europe.
The party is calling on the government to negotiate a “bespoke” new UK-EU Customs Union to put pressure on the White House to end the trade war.
Calum Miller, the Lib Dem foreign affairs spokesperson, said: “Despite weeks of refusing to criticise Donald Trump’s damaging behaviour, it’s now increasingly apparent that the government will not secure a carve out for the UK ahead of Trump’s global tariff war.
“Trump has shown himself to be an unreliable partner on the economy. No one, not even the US’s oldest allies, are safe from the economic harm reaped by this White House.
“We need to end this trade war as quickly as possible. That means working with our Canadian and European allies in a united front against Trump, including retaliatory tariffs where necessary – as well as negotiating a bespoke new customs union agreement with the EU to better protect British businesses.”
Speaking on Monday, Kemi Badenoch said Trump’s tariffs could “cripple” some sections of the UK economy.
The leader of the Conservative Party said she was “very nervous” about the potential impact and urged the government to do “everything they can to negotiate away the possibility of tariffs”.
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She told LBC: “I am very nervous. We wanted to have a UK-US trade deal when we were in government. Under president Trump we started negotiating, president Biden did not want to do any trade deals with any country.
“It is now imperative that we get a trade deal… and one that deals with the sectors that are most impacted, so manufacturing, car manufacturing in particular, steel, these are industries that will be severely crippled.”
Badenoch warned against a trade war and retaliation because that just “makes everyone poorer”.
“This is a time for significant diplomacy”, she added.
A member of the OBR’s Budget Responsibility Committee has said US tariffs at 20 or 25 per cent, if maintained on the UK for five years, would “knock out all the headroom the government currently has”.
Giving evidence to the Treasury select committee on the spring statement, David Miles said: “If tariffs at 20, 25 per cent were put on the UK and maintained for five years, our assessment of what that does is that it will knock out all the headroom that the government currently has.
“Had we made that a central forecast, and had the government not changed policy at all knowing that we were going to take that as our central forecast, then the headroom would have pretty much all gone.
“Of course that would have been in some ways, a very extreme assumption. Because not only would that be as bad as people might expect in the very near term, but it would have been maintained for five years, which is beyond the next presidential election in the US.”
However, Miles added that a “very limited tariff war” could be “mildly positive” for the UK.
He added: “There’s a bit of trade that will get diverted to the UK, and some of the exports from China, for example, that would have gone to the US, they’ll be looking for a home for them in the rest of the world.
“And stuff would be available in the UK a bit cheaper than otherwise would have been. So there is one, not central scenario at all, which is very, very mildly potentially positive to the UK. All the other ones which involve the UK facing tariffs are negative, and they’re negative to very different extents.”
Josh Self is Editor of Politics.co.uk, follow him on Bluesky here.
Politics.co.uk is the UK’s leading digital-only political website. Subscribe to our daily newsletter for all the latest news and analysis.
Trump tariffs of 20 per cent could ‘knock out’ government’s fiscal headroom, OBR warns
