Starmer and Trump agree tariff negotiations will continue ‘at pace’

Sir Keir Starmer and Donald Trump discussed “productive negotiations” towards a UK-US economic prosperity deal and agreed they will “continue at pace” in a phone call on Sunday night, Downing Street has said.

The UK is trying to negotiate an exemption from tariffs on imports into the US.

Negotiations are said to be intense, with moves to decrease or even abolish a British tax on US big tech firms among the bargaining chips.

A Downing Street spokesperson gave a readout of the Sunday evening call between the two leaders.

They said: “They discussed the productive negotiations between their respective teams on a UK-US economic prosperity deal, agreeing that these will continue at pace this week.”

The US president has announced a 25% import tax will be introduced on all cars imported to the US, a measure expected to hit British luxury car makers such as Rolls-Royce and Aston Martin.

The levy is on top of a series of tariffs set to come into effect on April 2, which could include a general 20% tax on UK products in response to the rate of VAT.

Mr Trump has branded April 2 “Liberation Day” for America, as he claimed the tariffs he plans to introduce will free the US from foreign goods and boost its domestic economy.

The new trade taxes could however be make or break for the Government’s plans to grow the economy.

They come into force just after Rachel Reeves made a series of cuts at the spring statement in order to restore a narrow buffer for her public spending plans.

The Institute for Fiscal Studies think tank warned this fiscal headroom – which is considered historically small – could easily be eroded by events outside the Government’s control.

Sir Keir Starmer has said the UK “reserves the right” to introduce reciprocal tariffs on the US if a deal to exempt the UK cannot be reached.

However, the Office for Budget Responsibility (OBR) has warned the impact of imposing reciprocal tariffs on the US would be worse for the UK than allowing the levy to go ahead unimpeded.

Abolishing or reducing the digital services tax on big tech firms, including social media companies, search engines and online marketplaces, is reportedly being considered as part of the negotiations.

Discussions with the US over exemptions from the levy are “intense”, Home Secretary Yvette Cooper told Sky News on Sunday.

She added: “We obviously can’t keep a running commentary on different discussions that are taking place, but we have to always make sure that we’re acting in the national interest.”

Downing Street said Mr Trump passed on his best wishes to the King, who recently had to cancel engagements due to side effects from his cancer treatment.

The two leaders also discussed ongoing efforts to end the war in Ukraine.