UK ministers will press ahead with their message that a trade war is in “nobody’s interest” as more of Donald Trump’s global tariffs come into effect on Wednesday after a week of market turmoil.
Countries across the world are braced for potential widespread economic damage from the import taxes, which are scheduled to hit all goods entering the US from midnight Washington time and just after 5am in Britain.
Sir Keir Starmer earlier reiterated his call for a calm approach to the changed US trade policy as a sense of optimism returned to the financial markets after several days of heavy losses.
However, US stocks slid during evening trading on Wall Street after the White House confirmed a 104% tariff rate on some Chinese imports would become a reality.
Beijing had vowed to “fight ’til the end” and warned of countermeasures after Mr Trump threatened on Monday to raise his levies even further on the world’s second-largest economy.
Britain faces the lowest 10% “baseline” tariff rate and has resisted imposing immediate retaliatory action unlike the European Union, which is due to see a 20% import tax imposed.
Ministers still hope an economic agreement with Washington can be reached to soften the blow of the levy that will hit UK goods, along with a 25% import tax on cars and separate ones for steel and aluminium.
Speaking to MPs on Parliament’s Liaison Committee on Tuesday, the Prime Minister said: “My instinct is that we shouldn’t jump in with both feet to retaliate. So in that sense, I’m not changing my plans.
“Obviously we have to keep our options on the table and do the preparatory work for retaliation if necessary. But I think that trying to negotiate an arrangement which mitigates the tariffs is better.”
But Sir Keir indicated he wants to protect the NHS from US commercial interests, and was also “very clear” that a digital tax on big tech firms should remain in place, despite reports the levy could be abolished as part of a deal.
“I have been very protective of the approach we take to the NHS in any dealings with any other country because it is our greatest asset, and we are not trading it away,” he said.
The tariffs are not a “temporary passing phase” but part of a “changing world order”, the Prime Minister added.
A 10% import tax on goods coming into America from around the world kicked in on Saturday morning, while a 25% levy on foreign cars had come into force on Thursday.
On Wednesday, the White House is set to impose specific tariffs on about 60 countries it describes as the “worst offenders” in terms of charging higher tariffs on US goods or implementing “non-tariff” barriers to American trade.
These include the EU, China, Japan, Thailand, Vietnam, Cambodia, South Africa and Taiwan.
London’s FTSE 100 index was up 2.71%, or 208.45 points, on 7,910.53 at the close of trading on Tuesday, while the Dow Jones index and the S&P 500 also jumped and Asian markets rebounded following steep falls in previous days.
But after roaring to an early gain of 4.1%, which had it on track for its best day in years, the S&P 500 careened all the way to a loss of 2.6%.
The Dow Jones Industrial Average was down 683 points, or 1.8%, after giving up an earlier surge of 1,460 points, while the Nasdaq composite was down 3.2%, as of 3.39pm Eastern time (8.39pm BST).
Even after those jumps, analysts had been warning to expect more swings up and down for financial markets in the days ahead.
Mr Trump says the tariffs are necessary to narrow trade deficits, which measure how much more the US imports from other countries than it sends to them as exports.
Speaking to broadcasters on Tuesday evening, health minister Stephen Kinnock said the global headwinds were “very turbulent” and that rebuilding relations with Brussels would be key to protecting the UK.
“We live in an incredibly deeply integrated global economy with very integrated supply chains and hugely interdependent commercial relationships, so nobody benefits from a trade war,” he said.
He said the UK was focused on strengthening ties with the EU, developing an industrial strategy to enable Britain to “stand firmly on its own two feet” and negotiating an agreement with the US.
“I think the combination of those three things is going to help us to weather the storm,” the minister said.
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