UK-US trade fair, No 10 says in face of tariff fears

Downing Street in the UK has stated that a "fair and balanced trade relationship exists between the UK and the US, which benefits both sides of the Atlantic." This statement comes after US President Donald Trump imposed a 25% tariff on imports from neighboring countries like Canada and Mexico, and threatened similar actions against the EU.

When asked about the UK, Trump said in an interview with the BBC that the two countries' trade relationship was "unbalanced" but could be "sorted out." Meanwhile, UK Prime Minister Keir Starmer is in Brussels attending an EU leaders' summit, part of his ongoing effort to "reset" relations, including exploring closer trade ties.

However, closer ties between the UK and the EU could anger the US and risk drawing the UK into a trade war. Similarly, the EU might object to Starmer choosing to side with the US over its European neighbors. Downing Street, when asked about the relationship with the US, stated that the Prime Minister trusts Trump and noted the two have had "a number of constructive conversations early on."

A spokesperson added, "We have a fair and balanced trade relationship that benefits both sides of the Atlantic. Trade is worth around £300 billion, and we are each other's largest single investors, with £1.2 trillion invested in each other's economies." Following Trump's announcement of tariffs over the weekend, European and Asian stock markets fell, with car manufacturers being particularly hard hit. The UK was also affected, but to a lesser extent than the EU.

An analysis by the University of Sussex last year suggested that if the US imposed a blanket 20% tariff on all imports, UK exports could face losses of £22 billion. Major UK exports to the US include cars, pharmaceutical products, and mechanical generators. Trump argues that imposing tariffs will help the US economy grow and protect jobs, but this could result in consumers paying more due to price adjustments.

Other leaders have reacted strongly, with Canada immediately announcing retaliatory tariffs of 25%. French President Emmanuel Macron said that the EU must "uphold its dignity and respond" if its interests are attacked. EU foreign policy chief Kaja Kallas stated: "There are no winners in a trade war." She also added that if a trade war were to break out with the US, "then the one who would be laughing on the sidelines is China."

Starmer, speaking on Sunday, was more cautious than his EU allies, saying: "It is too early to say. What I want to see is strong trade relationships." When asked if he would impose tariffs on the UK, President Trump said: "The UK is unbalanced, but I believe that can be sorted out." He also added that his discussions with the UK Prime Minister were "very pleasant," "we've met a couple of times, had many phone calls. We get along very well."

The UK hopes to forge stronger trade links with both the US and the EU, which is partly why the Prime Minister is visiting Brussels. The summit will focus on defense, but the UK also wants to discuss easing restrictions on trade in food and animal products, as well as cooperation on emissions trading schemes. Mutual recognition of professional qualifications and allowing touring musicians to travel more easily are also areas of focus. The EU is keen to establish a youth mobility scheme, which would make it easier for young EU citizens to study and work in the UK, and vice versa. However, ministers have so far rejected the idea.

Downing Street has not ruled out joining the Pan-Euro-Mediterranean Convention, which would allow tariff-free trade in certain goods. The Conservatives have accused the government of "trying to re-open old arguments and drag us back into the EU." In contrast, Liberal Democrat leader Sir Ed Davey has been urging the government to negotiate a new UK-EU customs union, allowing tariff-free trade between the two.