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Sir Keir Starmer is under increasing pressure to secure a deal with Donald Trump after the US president said he could exempt Australia from punishing tariffs on steel.
The US president triggered panic over the future of Britain’s fragile industry on Monday when he announced a worldwide 25 per cent tariff on steel imports.
Mr Trump has hailed the move and claimed it is “the beginning of making America rich again”.
But he also announced on Tuesday he would give “great consideration” to handing Australia a carve-out because of a trade surplus.
And, in a blow to Britain’s hopes, he added: “We have a huge deficit with the UK,” although that is driven by services rather than goods.
Australia has made the case for a special deal in recent days, with the country’s trade minister arguing its steel and aluminium exports created “good-paying American jobs” and were important to shared defence interests.
On Monday night Rachel Reeves said she and Sir Keir would argue for an exemption from the tariffs for the UK.
She said “there is a deal to be done”, adding that “unlike many other countries around the world, we don’t run a trade surplus with the US”, during a recording of the Political Party podcast with Matt Forde.
The UK’s new ambassador to Washington Peter Mandelson has also warned against “overreacting”, as he said: “I don’t believe that his tariffs are actually directly targeted at us.”
During an urgent question in the Commons, trade minister Douglas Alexander said “we stand ready to work with President Trump to find solutions that work for the UK and the US”.
Buy shadow trade minister Dame Harriett Baldwin hit out at the government, saying the PM should have “got on a flight to the States at the first possible opportunity” as she crfiticised “years of student politic-style insults hurled at the president by the frontbench opposite” which she said had put the UK’s relationship with the US “in jeopardy”.
The UK government is not minded to retaliate with tariffs, in contrast to the EU. As well as hitting UK exports to the US, a global trade war could see an influx of cheaper imports that would put British suppliers out of business.
No 10 claimed the special relationship with the US was “very good” – days after the 25% steel tariffs were announced.
Asked about a possible deal for the UK, Downing Street also declined to get into detail on any discussions.
The steel industry has called for action to mitigate what could be a “devastating blow”.
The UK exported 166,433 tonnes of steel to the US in 2023, the last full year for which figures are available. The US is the world’s second-largest export market after the EU, although the government said it had only accounted for 5 per cent of UK steel exports in 2023.
UK Steel director general Gareth Stace said: “It is deeply disappointing if President Trump sees the need to target UK steel, given our relatively small production volumes compared to major steel nations.
“The UK produces world-leading steel, supplying the US with high-quality products for defence, aerospace, stainless, and other critical sectors, materials that simply cannot be replicated elsewhere.”
Also on Tuesday, the Australian prime minister Anthony Albanese said he had had a constructive phone call with Mr Trump.
He added: “I presented Australia’s case for an exemption, and we agreed on wording to say publicly which is that the US president agreed that an exemption was under consideration.”
