Britain is preparing for the impact of looming tariffs announced by US President Donald Trump, which threaten to wreak havoc on European economies. Sir Keir Starmer's government had been trying to negotiate an exemption from the taxes on imports into the US set to come into force tomorrow.

But despite the Prime Minister's attempts to leverage the "special relationship" the two nations share to shield Britain from Trump's exacting tariff drive, Downing Street has admitted the UK will be among those impacted. The Republican announced a 25% import tax will be imposed on all cars imported to the US, in a blow for Britain's automotive sector. The move is expected to hit British luxury car makers including Rolls-Royce and Aston Martin.

On Monday, Sir Keir's official spokesperson said: "When it comes to tariffs the Prime Minister has been clear he will always act in the national interest and we've been actively preparing for all eventualities ahead of the expected announcements from President Trump this week, which we would expect the UK to be impacted by alongside other countries.

"Our trade teams are continuing to have constructive discussions to agree a UK-US economic prosperity deal. But we will only do a deal which reflects this Government's mandate to deliver economic stability for the British people, and we will only act in the national interest."

Asked whether the Government had given up hope of signing an economic deal between the two nations before Wednesday, hailed as Liberation Day by Trump, the spokeperson said he is "not going to put a time frame on those discussions" though they are "likely to continue beyond Wednesday". He added that the UK Government will "take a calm and pragmatic approach in our response".

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Two leaders discussed the "productive negotiations" over a potential economic pact in a phone call on Sunday, with both agreeing that "talks will continue at pace this week", according to a Downing Street read-out of the call.

Despite gloomy predictions from economists, and unease in international markets, Trump has insisted tariffs can be used to free the US from foreign goods and encourage businesses to move production to the US.

Today, Sir Keir conceded it was likely that the UK would be impacted, telling Sky News: “The likelihood is there will be tariffs. Nobody welcomes that.

"We are 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 interests.”

He said that though “all options remain on the table” in response, businesses want a “calm and collected response to this, not a knee-jerk”.

Sir Keir voiced hopes that a trade deal would "mitigate the tariffs”.