Sir Tony Blair has urged Sir Keir Starmer not to retaliate against Donald Trump’s tariffs, saying such a move wouldn’t be in the UK’s “best interests”.
The prime minister will hold discussions with other international leaders this weekend as the government scrambles to respond to the news that British exports to the US willl face a blanket 10 per cent levy, a move that sent global markets tumbling and sparked fears the chancellor’s fiscal headroom could be wiped out.
In a rare intervention, the former PM told students at King’s College London that he supported Sir Keir’s “cool heads” approach to Trump’s ‘Liberation Day’, and he didn’t really understand the intellectual argument behind the tariff policy.
“I don’t think it is in the UK’s best interest to retaliate,” he said, but admitted he did not know where developments over the tariffs would end.
Sir Keir will have a series of phone calls with European and Commonwealth leaders, but not Mr Trump, over the weekend, as the world reels from the start of a trade war that on Friday saw China hit back against the US with 34 per cent reciprocal tariffs.
Downing Street also rejected President Trump’s claim the Labour leader was “very happy” about Britain’s treatment, saying “we are disappointed by the tariffs”.
The government has already threatened to hit the US with retaliatory tariffs if a trade deal cannot be struck. Officials are now working through 417 pages of products they could target with taxes, with a list that includes everything from bourbon whiskey to Harley Davidson motorbikes.
But on Friday, a former economic adviser to Chancellor Rachel Reeves warned ministers against putting all their “eggs in this one basket” in hoping a trade deal will help Britain avoid tariffs.
Ex-Treasury minister Lord Jim O’Neill instead said the UK should join with other G7 nations to turn the tables on President Trump.
He warned Sir Keir against “trying to be the US’s best friend in the developed world… as there will be no great trade deal with them unless we give them things we have opposed to in past”, in a reference to rows over not accepting US chlorinated chicken.
The UK should work with other countries in the G7 group of leading economies, except the US, “on joint tariff reduction between the six of us, especially in services, which is where we have a net edge in global trade,” he said.
That, combined with the “boldness and confidence” to borrow to invest, including in major infrastructure to help boost growth, and securing better trade deals and trading relationships with China and India, would allow the UK to “minimise the Trump interference to a self-destruct button” for the US.
Asked about Lord O Neill’s comments, No 10 said: “The prime minister is concentrating on his engagement with our global partners and you will see evidence of that this weekend. But as we’ve said before, we will be maintaining a cool headed and pragmatic approach, and one that is grounded in our national interest.”
Former chancellor Jeremy Hunt also argued against striking back, telling the BBC that British exports to the US are so small a share of US GDP that that “the idea that President Trump will sweat with the threat of British retaliation is for the birds”.
He urged Sir Keir to stay true to the UK’s history as “one of the world’s most open trading economies… that is the best way we can weather this storm we are going through”.
Labour mayor of London Sir Sadiq Khan also cautioned against “kneejerk retaliation” saying that acting before trade deal talks become clear risks “cutting off your nose to spite your face. Let’s wait and see if we get a trade deal”.
Earlier, Ms Reeves said that the government is “determined to get the best deal we can” with talks ongoing.
She said: “Well, of course, we don’t want to see tariffs on UK exports, and we’re working hard as a government in discussion with our counterparts in the US to represent the British national interest and support British jobs and British industry,” the chancellor said on Friday.
“Those conversations are ongoing at the moment, but we’re determined to get the best deal we can for our country.”
But even with a deal, the global impact of Wednesday’s tariffs is expected to cause a significant economic shock to the UK.
The impact of the tariffs could already be felt, with stock markets tumbling around the world. The FTSE 100 fell to a three-month low on Thursday, while in the US, the Dow Jones index suffered its worst day since 2020, falling almost 4 per cent as analysts at Barclays said there was a “high risk that the US economy enters a recession this year”.
The Institute of Directors (IOD) said most business leaders were adopting a “wait and see” approach, while others were looking to re-locate activity to the US or trade more with other markets. A snap poll of 562 of its members found a third of bosses, 37 per cent, expect to be hit by the tariffs.
Anna Leach, the IOD’s chief economist, said: “With so much uncertainty… it is understandable that businesses will be reluctant to sink time and money into responses which are costly and difficult to reverse. But this will only add to the sluggishness in activity we have seen in the run-up to and since the October Budget announcements, and will further undermine growth.”
