Prime Minister says tariffs here to stay as he vows to 'turbocharge' economy

The Prime Minister has admitted US tariffs are here to stay and vowed to “turbocharge” the economy to mitigate the damage.

Donald Trump dropped his more extreme levies on Thursday, meaning most countries now face the same ten per cent rate as Britain on on importing goods to America.

The White House clarified on Thursday the tariffs imposed on Chinese goods coming into the US is at 145 per cent, after Mr Trump said on Wednesday he was hiking the levy to 125 per cent.

The administration said the lower figure did not include a pre-existing tariff of 20 per cent, which is being added on top.

Sir Keir Starmer has now suggested the tariffs on the UK are here to stay, so ministers must adapt to protect the economy.

Speaking to reporters in Cambridgeshire, the Prime Minister said: “My team are in contact with the president’s team every day.

“You have to understand that for the UK and the US we’re actually talking all the time.

“At the same time, I’m clear that this is a change which isn’t, in my view, temporary and therefore we’ve got to do the margins of making sure we turbocharge our own economy.”

His comments follow Trump’s top economic adviser Kevin Hassett saying it would take an “extraordinary deal” to see the 10 per cent rate lowered.

Speaking to to American broadcaster CNBC on Thursday, the director of the White House National Economic Council said: “I think everybody expects the 10 per cent baseline tariff is going to be the baseline.

“And it is going to take some kind of extraordinary deal for the president to go below there.”

It comes with the UK actively seeking out new markets to mitigate the damage, with a India trade deal close to completion. The Chancellor Rachel Reeves will visit the US this month, while a UK-EU summit in May has been described as a “chance “to refresh our relationship and make it easier for businesses to trade”.

Thursday’s visit also saw the Prime Minister deny the British approach to not retaliate to the US tariffs had resulted in no advantage for the UK.

He said: “I don’t think having a strong relationship with the US has given us no advantage whatsoever.

“We have got a very strong relationship on defence, security, intelligence sharing.

“No two countries are as closely aligned as ours.”

When pressed that most nations now face the same tariff rate as the UK, Sir Keir said: “Of course we are continuing to talk to the US about how further we can mitigate the impact of the tariffs.

“But a trade war is in nobody’s interest and there is no business sector that is being impacted by these tariffs who is saying jump in with both feet to retaliate and cause a trade war.”

Sir Keir also spoke to Japan's prime minister about maintaining a "calm and pragmatic approach" in response to the tariffs.

A Downing Street spokesperson said: "On trade, the leaders agreed that a trade war does not benefit anyone, and that now is the time for a cool, calm and pragmatic approach.

"They agreed on the importance of like-minded partners such as the UK and Japan to work closely together to lower trade barriers.

"Through trading blocs such as the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) and working bilaterally, there are many options to accelerate growth."

They also discussed "deeper co-operation" on defence and security, welcomed the progress of the Global Combat Air Programme (GCap) and reaffirmed their commitment to deliver the next generation of fighter jets.

"The Prime Minister thanked Prime Minister Ishiba for Japan's support for the coalition of the willing in support for Ukraine ," No 10 added.

At a televised cabinet meeting on Thursday, Mr Trump said there will "always be transition difficulty but it was the biggest day in history in markets".

He added that investors are happy with how the country is running as they "try to get the world to treat us fairly".

"Everybody wants to come and make a deal," Mr Trump added.

The president’s surprise announcement of the 90-day pause to hefty tariffs imposed on some countries brought respite to battered stock markets across the globe, including London’s FTSE 100.

The index closed up 3.04 per cent, or 233.77 points higher, at 7,913.25 on Thursday.

Meanwhile, in the US, the S&P 500 slid 4.9 per cent and the Dow Jones dropped 4.2 per cent amid a sell-off after a rally in the previous session.

Meanwhile, Kemi Badenoch called on the Prime Minister to convene members of a trans-Pacific trading agreement, including Mexico, Canada, Australia and Japan, to discuss ways to mitigate the impact of US tariffs.

The Conservative leader told the BBC: “All those countries are feeling the brunt of US tariffs.

“What I would be doing if I was prime minister is convening those countries to see what we can do to make life easier for the citizens of our various countries.”

Britain’s leading carmakers are ramping up pressure on Sir Keir over Mr Trump's 25 per cent tariffs amid fears over the future of the industry.

UK officials are locked in talks with the White House about whether the country can be exempted from the full brunt of the tariffs, which amount to a "baseline" 10 per cent on most exports but go up to 25 per cent for cars and steel.

The priority is currently to protect those areas worst affected by the trade warm with No 10 understood to be uncertain whether or not the baseline tariff can be negotiated away.

This week Sir Keir announced a watering down of the mandate for zero-emission vehicles (ZEVs) which will ban the sale of new cars powered by petrol and diesel from 2030, in a bid to boost the automotive industry.

The Society of Motor Manufacturers and Traders (SMMT) has called for trade talks to happen “at pace”. SMMT chief executive Mike Hawes said car manufacturers “hope a deal between the UK and US can still be negotiated”.

The group represents all Britain's major car manufacturers such as Aston Martin, Ford, Nissan, Jaguar Land Rover, Toyota, Volkswagen and McLaren.

David Bailey, professor of business economics at the University of Birmingham, said it was “hugely frustrating” for the UK manufacturers that the 25 per cent tariff still applies.

The car industry expert said it was realistic for Sir Keir’s government to push for a deal to remove all UK-US car tariffs “within weeks”.

Prof Bailey said: “They need to focus on a deal - it should be number one priority for trade policy. t’s a realistic goal that it can be done quickly. It’s a relatively easy hit for the UK Government to ameliorate some of the madness.”

A spokesman for Ford UK said it was “carefully reviewing the implications” of US tariffs, but added that there was “no doubt these tariffs will have an impact” on the industry.

A Jaguar Land Rover spokesman said the company “was pleased to hear the Prime Minister say he will ‘back you [JLR] to the hilt’ and that the changes to the ZEV mandate are ‘a down payment’ and ‘a statement of intent’ of the support the Government will give the UK automotive sector as it faces tariffs”. They added: “This is now a critical piece of work we need UK Government to resolve.”