Keir Starmer is taking urgent steps to prevent a potentially “hugely damaging” trade conflict with the United States. Experts caution that such tensions could push the UK into a recession.
The Prime Minister has minimized the likelihood of the UK retaliating with tariffs against Donald Trump, despite the former President’s unusual ambition to claim Greenland.
Starmer has also urged European Union leaders to avoid deploying a “tariff bazooka” in response to Trump’s actions, highlighting that a trade war could inflict severe economic harm and further strain crucial international alliances.
Over the weekend, President Trump shocked NATO members by announcing plans to implement a 10% tariff on imports from countries opposing his Greenland acquisition, which includes the UK, Denmark, Finland, France, Germany, the Netherlands, Norway, and Sweden. These tariffs are set to take effect on February 1 and could increase to 25% by June.
Economists on Monday warned that these tariffs could potentially reduce the UK’s GDP by tens of billions of pounds, risking a recession.
During an emergency press conference at Downing Street on Monday, the Prime Minister stated that President Trump was “completely wrong” to threaten allied nations with tariffs.
But the US President later said he was ‘100 per cent’ committed to the plan. And US Treasury secretary Scott Bessent warned the EU it would be ‘very unwise’ to retaliate.
Sir Keir said he did not believe that Mr Trump is planning to use military force to take Greenland, which is a semi-autonomous territory of Denmark. But Mr Trump yesterday declined to rule out the move.
Sir Keir is at loggerheads with Donald Trump over his bid to grab Greenland
Danish troops mounted live firing exercises in Greenland at the weekend in a bid to persuade President Trump they could defend the island against aggression from Russia and China
A snap YouGov poll showed widespread public support for retaliatory tariffs against the US, with 67 per cent of people in favour compared with just 14 per cent against.
But Sir Keir all but ruled out the move, saying: ‘This is a serious situation and threatening tariffs on allies is the wrong thing to do and a trade war is not in our interests and therefore my first task is to make sure we don’t get to that place which is what I’m focused on at the moment.
‘I don’t want to lose sight of the central goal here which is avoid the seriousness that a trade war would bring.’
He also ruled out asking the King to cancel a planned state visit to the US this year in protest.
The PM said there was a real risk that US attempts to seize Greenland could trigger a ‘dangerous downward spiral’ in the transatlantic alliance with ‘the potential for this to cause huge damage to the UK, whether that’s in a trade war or the weakening of alliances, and I do not want to see that happen.’
But he said the principle that the future of Greenland is for its people and the Kingdom of Denmark to determine ‘cannot be set aside because it goes to the heart of how stable and trusted cooperation works.’
The crisis in Greenland saw the PM tear up schedule. A planned speech on the cost of living in Yorkshire was abandoned, while Rachel Reeves pulled out of an event in the City to attend the PM’s press conference.
Sir Keir is now lobbying fellow EU leaders against imposing retaliatory tariffs. Emmanuel Macron is said to be pushing for the EU to deploy plans for a tariff ‘bazooka’, which was originally designed to punish hostile states. But European Commission chief Ursula von der Leyen, who discussed the crisis with the PM by phone at the weekend, is reported to be in favour of a more cautious approach.
The aggressive US approach to Greenland has been condemned across the political spectrum in the UK.
Worried: Rachel Reeves cancelled her plans to help deal with the looming tariff crisis
Kemi Badenoch urged Mr Trump to ‘withdraw the threat of tariffs, for the good of US and European security’.
Nigel Farage said it was ‘difficult to tell’ whether Mr Trump was bluffing but said the threat of tariffs against the UK was ‘wrong’.
‘It’s wrong, it’s bad, it would be very, very hurtful to us,’ he said.
The Reform UK leader said he would be ‘having some words’ with members of the Trump administration about the issue at this week’s Davos summit.
Capital Economics said President Trump’s tariffs could knock up to 0.75 per cent off the UK economy, potentially costing the country more than £20 billion.
Highlighting the ‘pain’ it could cause British carmakers and the pharmaceuticals industry, chief economist Paul Dales said: ‘With the UK economy currently growing by 0.2 per cent to 0.3 per cent a quarter, if this hit came all at once it could trigger a recession.’
But he added: ‘The long -term political and geopolitical consequences would be much greater.’
Sir Keir warned that the impact of a wider fall out with the US could be even more damaging, with Britain’s security, including the operation of the Trident nuclear deterrent, potentially put at risk.
He said public anger towards Mr Trump’s tariff threat was ‘understandable’, but insisted: ‘On defence and security and intelligence and nuclear capability (it is) manifestly in our interest to have a strong relationship… our nuclear capability is our most important deterrent bar none and that has helped keep us safe for many years’.
The PM said the security relationship with the US ‘keeps us safe in many ways I can’t explain to you… it keeps us safe and is absolutely vital to every single person who lives in this country.’
