April 7, 2025
The global economic landscape has been upended by the latest wave of U.S. tariffs imposed by President Donald Trump, and the UK is bracing for impact. In response, Prime Minister Keir Starmer has pledged to “shelter British business from the storm” through a combination of industrial policy, trade negotiations, and potential state intervention. This bold stance marks a significant shift in the UK’s economic strategy, reflecting the urgency of mitigating the fallout from a looming trade war.
The Tariff Onslaught and Its Immediate Impact
On April 2, 2025, President Trump declared “Liberation Day,” imposing a 10% baseline tariff on imports from the UK and other nations, with additional 25% duties on British cars, steel, and aluminum16. While the UK avoided the steepest tariffs (some nations face up to 50%), the move has already disrupted key industries. Jaguar Land Rover (JLR), a cornerstone of British manufacturing, announced a pause in U.S. shipments as it reassesses trading terms—a decision affecting 200,000 UK jobs35.
The financial markets reacted sharply, with the FTSE 100 suffering its worst week since the COVID-19 pandemic, plummeting over 7%5. Analysts warn that prolonged tariffs could increase consumer prices, stifle exports, and trigger a global recession19.
Starmer’s Three-Pronged Strategy
1. Industrial Policy as a Shield
Starmer has signaled a willingness to intervene directly in the economy, a departure from traditional free-market orthodoxy. In an op-ed for The Sunday Telegraph, he wrote:
“We stand ready to use industrial policy to help shelter British business from the storm. Some may feel uncomfortable with the state shaping markets, but we cannot cling to old sentiments when the world is turning this fast.” 123
Key measures under consideration include:
- Emergency tax breaks for affected sectors like automotive and steel.
- Reducing regulatory red tape to accelerate domestic competitiveness.
- Strategic state investments in green energy and advanced manufacturing to reduce reliance on volatile global trade35.
2. Pursuing a U.S. Trade Deal—With Conditions
While Starmer seeks to avoid an immediate retaliatory spiral, he has not ruled out counter-tariffs. The UK has already drafted a 400-page list of U.S. goods that could face duties if negotiations fail18.
However, the Prime Minister emphasized:
“I will only strike a deal if it is right for British business and the security of working people.” 1
Conservative leader Kemi Badenoch has urged a “deep and meaningful trade deal” with the U.S., though Starmer remains cautious, wary of compromising UK standards12.
3. Strengthening Alliances Beyond the U.S.
Recognizing the risks of over-dependence on any single market, Starmer is diversifying trade partnerships. Over the weekend, he held calls with:
- French President Emmanuel Macron—Both agreed a trade war is “in nobody’s interests” but vowed to keep “all options on the table”16.
- EU Commission President Ursula von der Leyen—The EU is preparing a coordinated response, potentially including anti-dumping measures against cheap goods flooding European markets25.
- Leaders of Italy and Australia—Exploring alternative supply chains and investment opportunities8.
The Political and Economic Tightrope
Starmer’s approach is not without risks. Critics argue that state intervention could distort markets, while businesses fear prolonged uncertainty. Meanwhile, the National Insurance hike for employers, which took effect on April 6, adds another layer of strain6.
Yet, economists like Paul Johnson of the Institute for Fiscal Studies suggest that the crisis may justify extraordinary measures:
“If this is an economic crisis, it changes what is the appropriate policy response.” 5
Global Repercussions and the Path Ahead
The tariffs have sparked global unrest:
- China retaliated with 34% tariffs on U.S. imports5.
- Mass protests erupted in the U.S., with demonstrators condemning Trump’s “authoritarian overreach”9.
- Elon Musk, a Trump ally, surprisingly called for a “zero-tariff situation” between the U.S. and Europe4.
For the UK, the immediate focus is damage control. Starmer’s government plans to “turbocharge” domestic competitiveness this week, possibly fast-tracking elements of Labour’s industrial strategy originally slated for summer13.
Conclusion: A New Economic Era Demands Bold Moves
Keir Starmer’s vow to protect UK businesses underscores a pivotal moment in economic policymaking. The “storm” of tariffs has forced a reevaluation of long-held assumptions, with the Prime Minister betting on state intervention, strategic alliances, and resilience-building to weather the crisis.
As the world navigates this new era of trade volatility, the UK’s ability to adapt—without sacrificing its workers or industries—will determine whether Starmer’s gamble pays off. One thing is clear: in the face of Trump’s protectionist wave, business as usual is no longer an option.
