Keir Starmer is heading for a potential standoff with Donald Trump over the US president’s recent pledge to impose new tariffs on the UK and his stance on Ukraine’s NATO aspirations.
Trump announced on Thursday his plan to introduce “reciprocal tariffs” on all countries, arguing that matching foreign levies on American exports is “fair to all.” The implications for the UK remain uncertain, but experts warn that targeting VAT in these tariffs could reduce the UK’s Gross Domestic Product (GDP) by approximately £24 billion over the next two years.
Meanwhile, growing concerns emerge over Trump’s foreign policy, particularly after his unexpected conversation with Russian President Vladimir Putin. The US government has hinted that Ukraine might have to cede territory, contradicting NATO’s position, which remains firmly in support of Ukraine’s eventual membership.
US Defense Secretary Pete Hegseth suggested that Ukraine’s NATO bid is unrealistic, despite the UK-Ukraine 100-year partnership agreement that supports Kyiv’s integration into the alliance.
Britain has strongly rejected the idea of excluding Ukraine from discussions about its future, with Downing Street asserting that “there can be no negotiation about Ukraine without Ukraine.” This position could set the stage for a diplomatic clash between London and Washington should Kyiv be sidelined.
Following Trump’s statements, Starmer held discussions with Ukrainian President Volodymyr Zelensky, reiterating Britain’s unwavering support for Ukraine’s NATO ambitions. The issue is expected to dominate talks at the upcoming Munich Security Conference, where senior UK ministers will join European allies in formulating a response to Trump’s shifting policies.
In a bid to prevent further diplomatic tensions, Starmer and Trump spoke over the phone on Thursday evening, with Downing Street confirming they discussed the prime minister’s “forthcoming visit to the US.”
UK Prepared To Respond To Trade War
UK government officials have also reacted strongly to Trump’s tariff threats, with concerns that they could spark a global trade war. Business Secretary Peter Kyle assured that Britain would “respond accordingly” if the US follows through with the plan.
Asked whether the UK should be alarmed, Kyle stated, “The first thing to reassure people is that we need a government with cool, clear thinking at times like this, and this is what you have with this government.” He added that the UK will carefully assess any potential economic impact before deciding on retaliatory measures.
Pressed on whether Britain would counter Trump’s tariffs with its own, Kyle remained noncommittal but emphasized that any response would be based on “what we actually have in fact.” Similarly, senior minister Pat McFadden urged patience, saying the UK would “wait and see” whether the tariffs “actually come to pass.”
The tariff policy unveiled by the White House is broad and seeks to retaliate not only against foreign tariffs but also against what it describes as “unfair or harmful acts, policies, or practices.”
These include subsidies, regulatory barriers on US businesses, and restrictions on agricultural imports such as chlorine-washed chicken. The policy also explicitly targets “value-added tax” (VAT) as “unfair” despite it being applied universally in the UK.
Financial analysts warn that the consequences of Trump’s tariff agenda could be severe. George Saravelos, Deutsche Bank’s global head of FX Research, estimates that if the US includes VAT in its tariff calculations, UK businesses could face an additional 21% charge.
According to the National Institute of Economic and Social Research (NIESR), this could slash UK economic growth by 0.4% over two years, equating to a £24 billion loss.
Trump has taken an aggressive stance on tariffs since the start of his presidency, most recently imposing a 25% duty on steel imports. His trade policies have strained relations with several US allies, including Canada and Mexico, both of which have threatened retaliatory tariffs.
While Trump has previously backed down on some of his tariff announcements — such as his temporary suspension of levies on Canadian and Mexican imports — other countries, including China, have already imposed countermeasures in response to his trade restrictions.
With tensions mounting on multiple fronts, Starmer faces a delicate balancing act as he navigates the challenges posed by Trump’s economic and foreign policy agenda.
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