Rachel Reeves has warned struggling families that Donald Trump’s economic wrecking ball policies will have “huge implications”.
The Chancellor vowed to act “decisively” as she refused to rule out retaliating to US tariffs – but declined to back a “buy British” campaign. Updating MPs on the unfolding crisis, she told people struggling with the cost of living crisis: “We have your backs.”
Trump has piled misery on UK businesses and workers by announcing a 25% tariff on British cars and steel, as well as 10% on all other goods. Ms Reeves, who described the President’s actions as a “disproportionate response”, said: “I know that this is an anxious time for families are worried about the cost of living. We have your backs.
“British businesses who are worried about what a changing world will mean for them. We have your backs too. This Government is clear eyed that our response to global change cannot be to watch and wait, but instead to act decisively to take the right decisions.”
She said she would be meeting her US counterpart, Scott Bessent, “shortly” to discuss trade between the two nations. Ms Reeves said a trade war is “in nobody’s interests”, but went on to warn: “We have been clear nothing is off the table. It is why we will continue to back British businesses during these uncertain times, particularly those industries that are most affected as we rebuild our industrial base here in Britain.”
She said the tariffs on cars and steel “pose a real challenge” as these are some of the UK’s export markets. The Chancellor told MPs she had spoken to the Governor of the Bank of England this morning, and been told that British markets are “functioning effectively”. But she stated: “The United States’s decision to impose tariffs has had and will continue to have huge implications for the world economy.”
Ms Reeves said: “I know that the challenges facing the global economy and the potential impact could be profound. And as a government, we must step up to that challenge to deliver security for working people through our plan for change that is underpinned by stability reform and investment.”
Responding to calls to back a “buy British” campaign – put forward by the Lib Dems – Ms Reeves said: “What we don’t want to see is a trade war, with Britain becoming inward-looking, because if every country in the world decided that they only wanted to buy things produced in their country, that is not a good way forward.”
Later Keir Starmer told MPs the UK is keeping its options on the table “if necessary”. The Prime Minister told the Liaison Committee: “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.” He insisted Donald Trump’s tariffs were not a “temporary passing phase” but part of a “changing world order”.
Tory Shadow Chancellor Mel Stride said it is a “time of great concern for millions of people up and down the country”. He continued: “Free trade has been the bedrock of prosperity for our country, and countries around the world, for decades.
“It has raised billions out of poverty. Tariffs are the enemy of free trade and we on this side of the House will do whatever we can to assist the Government in getting these tariffs down.”
It comes as polling shows less than half of Brits think the US is an ally – with a majority wanting the Government to strike back. Eye-opening data reveals that just 43% thinks Washington can be relied on – a dramatic fall in the past month. And 15% now view the US as an enemy – up from 8% a month ago.
It comes as the Government grapples with swingeing tariffs which have sparked fears of a worldwide recession. Keir Starmer warned the escalating crisis will have a “profound” impact and said it is not a “passing phase”. But he called for “cool heads” after Trump slapped 25% tariffs on cars and steel and 10% on all other goods.
Polling found that 51% of voters want the UK to strike back – as other governments including China have done – and bring in their own charges for imports. Just 27% would oppose this, data from More in Common UK found.
On Monday Keir Starmer said the tariffs which could devastate British businesses are not a “passing phase” as he described it as a “moment for urgency”
And he said now is the time to “rise together as a nation” in the face of growing uncertainty. Mr Starmer told workers at motoring giant Jaguar Land Rover – which will be hit by a 25% tariff on exports to the US: “Old assumptions that we’ve long taken for granted simply don’t apply any longer.”
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