Prime Minister Sir Keir Starmer watched in his flat. Chancellor Rachel Reeves saw it in her study. The Business Secretary Jonathan Reynolds, accompanied by staff and pizza, took in President Donald Trump’s big tariffs reveal on Wednesday from his office in Old Admiralty Arch, from where the British Navy was directed to protect and control trade on the high seas in days gone by.
Ministers can only dream of having that kind of power now, as the UK watches on in growing horror at the bust-up between the US and China.
“Sometimes people don’t realise they are living through a moment of history,” a cabinet minister notes, as Trump and Chinese President Xi Jinping square up to each other, and stock markets plunge. Trump has slapped a 10% tariff on all nations – including the UK – for imports into the US, and much higher rates on some countries, including China, which has responded with fresh tariffs of its own.
So what’s happening in Whitehall right now to try to limit the harm to the UK, perhaps by making a deal with the US, and make the most of any opportunities?
The PM is spending another dramatic weekend working the phones from the peace of his country pad, Chequers. So far, the other calls that could really matter, from US negotiators, have not yet resumed.
Trump dangled a possible trade deal that might exempt the UK from some of the costs from tariffs during the pair’s chummy White House press conference in February. There have been significant negotiations since then by a team of around 20, led out of No 10 by Michael Ellam, the Treasury and banking veteran, and the PM’s business adviser Varun Chandra alongside the business secretary.
Those talks included ideas about the UK watering down rules on electric vehicles, possible changes to a tax on tech companies (“space to talk about it”, one minister says) and changes to online safety rules (“not happening”, says a government source).
But as the US government prepared for its announcements on Wednesday, talks about a deal ground to a halt. Now, after the announcement, the “ball is in their court”, said one government source involved, waiting to hear if, in the chaos of Trump’s new tariff world, the White House can find time and energy to push a deal with the UK.
“We’re expecting to hear from them any moment,” one of those involved hopes. The risk, in the visible turmoil, is that any economic agreement could become a case of: don’t call us, we’ll call you. We’ll be asking Darren Jones, the Treasury Minister, about it when he join us in the studio tomorrow.
If a deal is done, however, do not expect an all-singing all-dancing arrangement. Instead, “it would be a basic agreement on principles – rather than a super detailed trade agreement”, says a government source, contrasting these “quick and dirty” moves to long-running negotiations with India (“we’re on our 15th chapter with them!”).
Uncertainty around the talks, and the limited nature of what a deal could achieve in any case, means No 10 is “not sitting here waiting for it – it’s not the basket where all our eggs are”.
For weeks the government told us they were preparing for all kinds of scenarios. A secret cabinet committee was considering how the UK might react if Trump’s tariffs materialised.
But now they are here, the actual response is… not to respond, and to spend four weeks asking businesses if they would like the government to respond later on. That is not just Whitehall dither: at this stage, there seems to be almost zero appetite among ministers to join in with the rounds of tariffs between the US, China, and perhaps the EU in coming days.
One Whitehall figure working with business says “there has not been a single voice in business, big or small, saying this is the wrong strategy”.
Ministers’ approach to get businesses on board, like when Sir Keir invited dozens of big wigs to No 10 the morning after Trump’s tariff announcement, is in part because of the anger when the government increased National Insurance contributions. “The really calm reaction,” one source says, “is because we got people into the headspace where tariffs were going to happen – one of the businesses said they were being borderline stalked, we’ve been trying to persuade business to trust the process.”
The government is in no rush, and has no enthusiasm to introduce its own new tariffs, and for now at least, demands on them to do so are muted. According to a minister: “Most people have considerable numbers of jobs in their constituencies on the line – even in cabinet there might have been some question marks but there weren’t this week.”
And they joke that the Lib Dems, who are calling for tariffs in retaliation, “keep demanding a trade war but I don’t think they’ll lead the nation”. Conservative leader Kemi Badenoch, who also does not want extra tariffs, will be on tomorrow’s show too.
But just as the government is going slow on hitting back, they are cracking heads to crack on with their existing plans faster.
This isn’t all about Trump. I understand the chancellor is looking at whether any of the money announced in the government’s vital Spending Review can be brought forward from June. If government departments are able to finalise their deals, can that be sorted and made public as soon as possible?
There are discussions too about whether it’s possible to speed up the long waited-for Industrial Strategy – a plan to get investment into the UK pencilled in for June, but could it be brought forward? A decision hasn’t been made but the prime minister is again, his team indicate, trying to use the jeopardy around the world as an impetus to push the government machine harder. “We have to run quickly towards this,” a government source says – and the chancellor is looking at it this weekend.
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You might feel, haven’t I heard this before? You’d be right. Since the start of the year, the prime minister and the chancellor have both repeatedly said the government has to go faster, work harder. So why after years in opposition weren’t Starmer’s team ready to go with all of these changes when they got into office? For a government that promised to be radical, its plans have not always been forthcoming.
You may not fancy the kind of radicalism we’re seeing out of the White House, but radical it certainly is. To compete, the UK may need to be that too.
It is ludicrous to imagine the PM is “very happy” that the UK has been hit with tariffs as Trump suggested – “artistic licence”, a government source remarked. No British action can completely insulate our economy from disruption abroad. But the government’s own actions do matter, and this could be a defining moment.
While there’s been no lack of trying to soften the blows for the UK, the government’s hopes have been dashed already. First, ministers believed the UK could escape tariffs, then they said they were prepared in case, then disappointed when they arrived. As Sir Keir spends another weekend on the phone, and officials hope the phone rings, the government doesn’t know what they will be able to say next.
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