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April 4, 2025 • 13 mins

The UK is still hoping to negotiate a deal with the United States, after Donald Trump imposed a 10% tariff on British goods. Business and Trade Secretary Jonathan Reynolds said the decision was 'disappointing', and Keir Starmer promised to focus on the UK's interests in a 'new era' for global trade. We discuss the government's options with our politics and economics reporter Lucy White. Hosted by Lizzy Burden and Stephen Carroll.

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Speaker 1 (00:00):
Bloomberg Audio Studios, podcasts, radio news.

Speaker 2 (00:07):
It is the beginning of a new era. We need
to understand that, just as we've understood it for defense
and security, we have to understand the changing world when
it comes to trade and the columny.

Speaker 3 (00:18):
It is also time for Keir Starmer to change his
strategy for dealing with Donald Trump. Hello, you're listening to
Boomberg UK Politics. I'm Stephen Carroll.

Speaker 2 (00:26):
And I'm Lizzie Berden. Welcome to the program. Now, Stephen,
it wasn't so long ago that it looked like Kiir
Starmer was teaching a masterclass in diplomacy plicating an often
volatile and fired up Donald Trump at the beginning of
his second presidential term. And that's even in spite of
certain less than complementary, shall we say, statements made about
the president by members of Starmer's own cabinet in the past.

(00:50):
Things were going so well. Trump even told reporters in
January that Starmer was doing a very good job and
added that the two have a very good relationship, heaping
praise on the Prime Minister, praise that would suggest a
renewed and a live special relationship, which is why Stephen
some may have been surprised when the UK was whacked

(01:12):
with a ten percent tariff alongside the likes of Egypt
and Iran, for example, which have far less extensive diplomatic
relationships with the US.

Speaker 1 (01:22):
Yeah.

Speaker 3 (01:22):
I mean, look, it's a question of whether there was
any win for the UK at all, but I suppose
the key, one of the most obvious one is that
UK only was given half of the tariff right of
what the European Union got they were hit with a
twenty percent tariff as well. Business and Trade sector Jonathan
Reynolds made that point when he spoke to Bloomberg after
the news. He says negotiations are ongoing. Kirs Starmer, We've

(01:43):
heard him say they're in a new era of trade.
He says he'll now be focusing primarily on Britain's national interests.
So in this new era, does it mean a new
approach to one of our closest allies? Will it be
no more? Mister nice Prime Minister?

Speaker 2 (01:57):
Let's see if love actually is over us?

Speaker 1 (02:00):
Now?

Speaker 2 (02:00):
With more on those questions, is bloom Most Politics reporter
Lucy White Lucy, we were listening to Donald Trump on
Air Force one yesterday saying the UK should be happy
with this ten percent tariff you got off lightly? Is
that true? Do you think realistically the UK won't be
disappointed with this? I mean, it's interesting.

Speaker 1 (02:19):
We've heard the Prime Minister and several of his cabinets
say they are disappointed and you can understand why. I mean,
you know, in the run up to Liberation Day as
it was called, we did hear several UK ministers sort
of implying and officials implying that they hoped they were
going to get off easy. You know, they hope they
were going to agree some sort of deal that would
exempt the UK, if not entirely, then more than we

(02:41):
have seen. You know, as you said, we're in the
basket of the minimum levee along with several other countries.
So you know, on one hand, we can be very
glad that we've not been whacked with the twenty percent
tariff that the EU has seen. But at the same time,
it doesn't imply much of a special relationship if you're
all are in the same basket as like you say,

(03:01):
people like Iran and you know, so it's worth noting
as well that there are some countries that seem to
have got off with no tariffs at all that it
includes Russia North Korea, and we've sort of heard some
murmurings from the White House suggesting that that's because the
US has no meaningful trade with those countries already. But
there are several countries that are still on the list
with those ten percent tariffs with whom the US doesn't

(03:22):
really have any meaningful trades. So it's hard to know
what to make of it.

Speaker 3 (03:25):
To be honest, are members of the government, you know,
clapping themselves on the back at their brilliant diplomatic strategy
or is it really just luck that has let the UK,
I suppose away, quote unquote with just ten percent.

Speaker 1 (03:37):
It's a good question, and I think it's hard to
know what the counterfactory would have been, you know, what
we might have seen otherwise without the last few months,
weeks and months of negotiations and conversations between Starma and Trump.
It does kind of imply that maybe at least Trump
hasn't isn't looking at the UK more negatively than he
might have done otherwise. You know, he does still seem

(03:58):
to look with some finish. You know, he's got obviously
got those family connections with the UK, and he does
at least seem to think that, you know, we're not
as bad as bad in inverted commas as the EU,
for example.

Speaker 2 (04:10):
So what can the UK actually offer the US in
terms of trade options to get off a bit more
lightly on these tariffs if that is even possible to
go below this minimum ten percent? Is it going to
be something on services? What's in the UK's arsenal?

Speaker 1 (04:31):
So when we saw Starma travel over to the White
House earlier this year, Starma and Trump agreed to form
a new economic deal. And they've been careful not to
call this a free trade agreement because it doesn't sound
like it's going to cover a lot of the areas
that might have been addressed by a full free trade
agreement in the past. And they said it was going
to focus on AI tech, digital that kind of stuff. So,

(04:56):
I mean, what we've heard from officials that seems to
be in the focus at the moment is the UK's
digital sales tax, for example, which which you know, levies
a two percent tax on big companies like Amazon Facebook.
We've heard that there's some flexibility being considered around that.

(05:17):
What that might look like we don't yet know, but
whether that's going to be enough to actually sort of
produce a meaningful result for the UK on tariffs. You know,
it remains to be seen. There's perhaps going to be
stuff around the UK's Online Harms Bill as well. I
mean we've heard jd Vance saying, you know, that he
can't fathom a trade deal without free speech, and whether

(05:40):
that means that the US is going to be influencing
the way the Online Harms Bill, which obviously introduces lots
more protections for users of digital services, then that remains
to be seen as well. I mean there's also talk
around agricultural stuff. I mean, what's always been a red
line for the UK in past trade talks with US
is food standards. You know, this idea of chlorinated chicken

(06:02):
on hormone injected beef that still seems to be a
red line for the UK. But whether the UK will
look at lowering tariffs on US meat imports for the
small amount of meat imports that the US already does
bring to the UK seems to be, you know, kind
of on the table as well.

Speaker 2 (06:18):
Well. Yeah, we heard from the US COMMO Secretary Howard
Lutnik on American beef and he was absolutely baffled in
his interview with Bloomberg Surveillance why Europeans don't want to
eat American beef. But of course on this side of
the Atlantic, it's a really big issue in the press
chlorinated chicken and beef as well.

Speaker 3 (06:37):
Yeah, I mean, certainly those are some of the stories
that we often see being headlined around negotiations, when particularly
thinking back to the Transatlantic Trade and Investment Partnership, which
was the last kind of big EU US trade framework
that was being negotiators, of course, never went anywhere in
the end. Thinking about strategy though, here Lucy, So we've
got warm words for the Prime Minister from Donald Trump.

(06:58):
We've got a couple of levers to pull that the
government could potentially talk about if they are trying to
get some sort of deal in these negotiations. Are both
of those things equally important really in the strategy for
the UK government going from here. Jonathan Roynolds had been
saying that negotiations are ongoing.

Speaker 2 (07:14):
Yeah, I mean, I was.

Speaker 1 (07:15):
It's interesting.

Speaker 2 (07:16):
I was.

Speaker 1 (07:17):
I was talking to Porford Faukner, the UK's former chief
trade negotiator, and an event yesterday that he was speaking at,
and he said, you know, the only real way for
the UK to come out of this well is to
agree a comprehensive trade deal with the US, you know,
something that actually is meaningful for the UK's economic growth.
You know, sort of agreeing sort of modifications to the

(07:39):
digital sales tax to get to tarish produced from say
ten percent to seven percent or something that's not going
to be meaningful, although you know, I'm sure several businesses
would welcome that. I think it is important for Starma
to keep talking with President Trump and see, you know,
kind of push on what doors can be opened. But
at the same time, I think there is some you know,
from what we're hearing coming out of the US administration,

(08:01):
there is some disagreement within the US administration as to
you know, what they're actually willing to do. You know,
are they actually willing to reduce from the ten percent
down further or is the ten percent a floor? And
there seem to be two camps within the US administration
who have differing ideas on that. You know, Some actually
seem to think, yeah, you know, we could talk with

(08:21):
countries like the UK and get that ten percent reduced,
and others seem to think, no, that ten percent is
the bottom. That's where we're willing to go. That's the minimum.
That's the minimum level that all countries are going to
have to deal with. And I think, you know, again
that refers back to something that Crawford Faukner was saying
yesterday and that you know, when you're having these conversations
with the US, the sort of fundamental question is are

(08:41):
they actually serious about negotiating here? Did they actually want
to you know, lower tariffs or is the idea of
tariffs for them a revenue raising measure so that they
can make all the other domestic tax cuts that they've
promised to do. Is it a way to you know,
kind of keep voters on side in those former rustbelt
industries and sort of prove to them that you are

(09:02):
serious about bringing manufacturing capabilities back to the US. So
I think there's still a lot of unanswered questions about,
you know, where the US actually stands in this and
what they want.

Speaker 2 (09:11):
Well, yeah, because it can't be a negotiating toolander revenue
raiser at some.

Speaker 1 (09:15):
Point, and no whenther you see that differ from country
to country. I don't know well on.

Speaker 2 (09:19):
That point though, given that already the US is treating
the EU and the UK differently, and lots of people
saying to us, Donald Trump's enjoying driving a wedge in
that Brexit split. What's the UK supposed to do in
terms of the EU and the Labor government's attempts to
reset that relationship. If the UK's position is much more

(09:41):
conciliatory with Washington, whereas the EU is being open about
it's want to retaliate here, does that do exactly what
Donald Trump wants and ruin the UK EU relationship even more.

Speaker 1 (09:54):
It is going to be a tricky line for Starma
and the rest of the cabinet to toe. I think,
you know, on the one hand, you know, as you say,
we're trying to get those that tariff barrier reduced with
the with the U s and then on the other hand,
we are trying to deepen our trading relationship with the EU.
You know, we've got talks ongoing between the Prime Minister

(10:15):
and various peers across the EU over over the next
few months. It it's hard to know what, where, how,
how the US are going to uh, well, how the
US are going to look at those efforts with the EU,
and how the EU are going to look at our
efforts with the US. I think, you know, there is
a recognition from each side that you know, you need

(10:35):
to do what's best for your own country, for your
own for your own block. But at the same time,
you know, if the if the EU sees US doing
as something, doing something with the U S which is
detrimental to any closer relationship with them. You know, if
we start diverging more from EU rules, from EU regulations

(10:56):
and you know, start aligning more closely to the to
the U S, that's obviously going to be a barrier
when you're trying to, you know, form any deeper trading
relationship with the EU, and.

Speaker 3 (11:06):
He's just taking it back then to the Westminster angle
of all of this, is it politically risky for Ker
Starmer and the government to be cozying up to Donald
Trump to try and get a better deal on tariffs,
you know, given that there are so many opinions about
his policies.

Speaker 1 (11:22):
Here Again, obviously a lot of businesses are saying, you know,
we want to we want to see the trading relationship
with the US improved. We want you to take a
very cool, calm and collected approach. So there is that
kind of desire from the business community here to say,
you know, let's keep a call head, let's not go
in there with enormous you know, retaliatory tariffs, and that

(11:46):
is something that Starmer has agreed to consult with the
business community on. You know, if the possibility of a
deal with the US does look like it's not going
to happen, then you know he's consulting with the business
community saying what would you think next about retaliatory tariffs.
At the same time, you know, there are a lot
of people in the UK who possibly think, you know,

(12:08):
we don't want to be bullied by Donald Trump. Why
why should Donald Trump be you know, sort of dictating
our domestic tax policy, and so there is probably a
pretty large section of the UK electorate who thinks, you know,
maybe we shouldn't bending over backwards Donald Trump. Maybe we
should be you know, looking to our allies in Europe
and you know, sort of forming closer ties there. But

(12:29):
I think there is you know, there is generally an
understanding that we kind of need to be able to
play both teams if it is the right analogy.

Speaker 3 (12:38):
Yeah, yet another fine line for the Prime Minister to walk.
Lucy White, our let's grow reporter, Thank you very much
for joining us. That's it from us for today. If
you like the program, don't forget to subscribe. Give it
five stars so other people can find us wherever you listen.

Speaker 2 (12:51):
This episode was produced by taa Adebio and our audio engineer,
with Sean Grastamachia. I'm Leslie Durden and I'm Stephen Carroll.

Speaker 3 (12:57):
We'll be back next week with more like this.
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