Donald Trump has declared that he can use tariffs in a “much more powerful and obnoxious way”, as the UK and the EU said they were seeking urgent clarity on the US trade deals they struck last summer.
Trump threatened to escalate his global tariff war on Monday, after a supreme court ruling last week that he had overstepped his legal authority to impose his “liberation day” measures last year.
Keir Starmer’s spokesperson said he did not expect Trump’s new 15% global tariff – announced on Saturday – to affect the majority of a UK-US economic deal that was agreed last year.
However, it is still not clear if the new tariffs, collected from Tuesday, will be at the 10% rate on most goods agreed last May, the 15% rate, or customs default to pre-reciprocal day tariffs.
Asked whether retaliatory tariffs were an option, the spokesperson said: “No one wants to see a trade war. No one wants to see a situation that’s escalated. But as I say, nothing is off the table at this stage.
“As you’d expect, discussions are still ongoing, and it is an evolving situation … While we understand the uncertainty this creates, businesses and the British public can be assured that we’re focused on protecting them and for national interest.”
The EU meanwhile on Monday paused the process of ratification of the deal it had struck with the US last July for the second time in a month, after it froze and unfroze the deal in the wake of Trump’s Greenland threats. The deal was for 15% blanket tariffs on EU imports that were inclusive of previous levies.
“Full clarity on what these new developments mean for the EU-US trade relationship is the absolute minimum that is required for us as the EU to make a clear-eyed assessment to decide on the next steps,” said Olof Gill, a commission spokesperson. “We are very clear what needs to happen here. The US needs to tell us precisely what is going on.”
A trade committee vote on Tuesday morning has been postponed.
Trump posted on his Truth Social Network on Monday that any country that wants to “play games” with the supreme court decision “will be met with a much higher Tariff, and worse, than that which they just recently agreed to”.
“The court has also approved all other Tariffs, of which there are many, and they can all be used in a much more powerful and obnoxious way, with legal certainty, than the Tariffs as initially used,” he wrote.
“Our incompetent supreme court did a great job for the wrong people, and for that they should be ashamed of themselves (but not the Great Three!).”
The decision was approved 6-3.
US shares fell on Monday. The Dow Jones was down 1.6%, the tech-heavy Nasdaq off 1.2% and the S&P 500 down about 1% in early afternoon trading on Wall Street.
The top US trade negotiator, Jamieson Greer, said at the weekend that deals already agreed “remain in place”.
He said on Sunday that the new 15% tariffs would not apply to countries with which it already had a deal, including the UK, the EU, Switzerland, Japan, South Korea, Vietnam and Lesotho.
“We want them to understand these deals are going to be good deals,” he told CBS. “We’re going to stand by them. We expect our partners to stand by them.”
Confusion reigns, however, among businesses in the UK and the EU. The new president of the British Chambers of Commerce (BCC), Andy Haldane, told the BBC he believed that the 15% tariffs did apply from Tuesday unless the government heard otherwise.
“We are 10% [tariff rate with the US]. If he [Trump] follows through tomorrow, that will be 15%, and that will mean the UK sits towards the bottom of the league table in terms of who’s been made worst off by the measures of the weekend,” he told BBC Radio 4’s Today programme.
The BCC said a fresh plan was needed for British exporters, with thousands of businesses expected to be worse off if an additional 5% tariff comes in from Tuesday.
The lobby group calculates that it would increase the levies raised from UK exports to the US by between £2bn and £3bn. “This will have to be absorbed either by our exporters, US importers or their customers,” it said.
It said it was “absolutely vital” that the UK continue to negotiate with the US and seek immediate discussions with Congress, “which now has an important role going forward”.
Peter Leibinger, the president of the German Federation of Industries (BDI), called on the EU to “quickly approach the US and provide clarity on tariffs and trade rules”.
The EU trade commissioner, Maroš Šefčovič, called on the need to “respect” the existing deal at a G7 trade ministers call on Monday.
“I restated that full respect for the deal is paramount. Staying in touch with my counterparts to secure reassurances,” he said in a social media post.
The US dollar was down 0.2% against a basket of other currencies on Monday after the US Customs and Border Protection (CBP) agency said it would deactivate all tariff codes associated with International Emergency Economic Powers Act-related orders as of Tuesday at midnight (5am UK time).
The CBP told shippers on Monday morning that it would stop collecting tariffs under the emergency powers act as of 12.01am (Eastern US time) on Tuesday.
Customs authorities in the US gave no new information about possible refunds for importers.
That is despite the supreme court’s decision making more than $175bn (£130bn) in previous US Treasury revenue subject to potential refunds, based on an estimate by Penn Wharton Budget Model economists.
