Locked in a trade balancing act with the U.S., the UK hopes it can escape some Trump tariffs

British Prime Minister Keir Starmer and U.S. President Donald Trump shake hands during a joint press conference in the East Room at the White House, Feb. 27, 2025 in Washington, D.C., U.S.

Carl Court | Via Reuters

As countries around the world brace for the implementation of U.S. President Donald Trump’s trade tariffs and with more targeted levies likely impending, the U.K. still hopes it can escape the worse of the import duties.

Britain has touted its far more balanced trading relationship with the U.S. in recent weeks, looking for a more lenient approach from Trump. The White House leader is railing against the States’ trade deficits with its biggest trading partners, such as Canada, China, Mexico and the European Union, and has either imposed or threatened (as with the EU) up to 25% tariffs on imports.

The U.K. has a more nuanced commercial relationship with the U.S., with the latest data released in February pointing to almost balanced trade when it comes to the import and exports of goods, along with a surplus over the trade in services.

Keeping Washington sweet is important for Britain — the U.S. was the U.K.’s biggest trading partner in the year to September 2024, accounting for over 17% of total British trade, official data shows.

Trump is seen as having a soft spot for the U.K. and visibly enjoyed a previous state visit to the country. He was recently invited for a second time by King Charles. The president also appears to have a good rapport with Prime Minister Keir Starmer, despite their different ideological backgrounds, and has previously recognized that the U.S.-U.K. trading relationship is less of a problem for him — and stating that he believed a trade deal could be worked out.

Yet Trump’s pledge to impose tariffs on “all countries” has led to fading hopes in Britain that a specific trade deal with Washington can be worked out before a raft of country-based, sectoral and “reciprocal” tariffs are announced by the White House on Wednesday.

U.S. President Donald Trump meets British Prime Minister Keir Starmer at the White House in Washington, D.C., U.S., February 27, 2025. 

Kevin Lamarque | Reuters

A glimmer of hope lingers, however, largely borne from Trump’s tendency to oscillate between more lenient and punitive positions.

The Washington Post reported Tuesday that White House aides had drafted a proposal that would levy tariffs of roughly 20% on most imports.

The paper, which cited three people familiar with the matter, noted that advisers cautioned that several options were still on the table, meaning the 20% tariffs may not materialize. Another plan being considered is the country-specific “reciprocal” approach, according to the Washington Post. CNBC has reached out to the White House for comment.

British Prime Minister Keir Starmer told Sky News on Tuesday that the UK is “working hard on an economic deal” with the U.S. and said “rapid progress” has been made but cautioned that a deal could take time.

He conceded that the country was still likely to be subject to new levies, however, with Trump already announcing a 25% tariff on steel and aluminum imports and on “all cars that are not made in the United States.” The latter levy came into effect on Wednesday. 

“I don’t think anybody wants to see tariffs,” Starmer told Sky News. “We’re working hard on an economic deal which we’ve made rapid progress on, and I hope we can make really speedy resolutions on,” he said.

“The likelihood is there will be tariffs. Nobody welcomes that. We’re obviously working with the sectors most impacted at pace on that. Nobody wants to see a trade war. But I have to act in the national interest, and that means that all options have to remain on the table,” he added.

The U.K.’s Trade Secretary Jonathan Reynolds insisted to the BBC on Tuesday that ongoing talks with the Trump administration meant Britain was in the “best possible position of any country” to have trade duties reversed.

It’s still unclear what exactly will be announced on Wednesday, economists note.

“In terms of the upcoming tariff announcement, we still don’t know which countries they’ll be imposed on and what rate. It’s fair to say that the administration might not have the final plan ready as yet,” Deutsche Bank strategists said in emailed analysis on Tuesday.

“[On Monday], White House Press Secretary Leavitt said a planned Rose Garden announcement would feature “country-based” tariffs, with further sectoral duties to come later,” the analysts added.