UK shares fall after Starmer holds Trump talks in frantic last-ditch push to dodge ‘Liberation Day’ tariffs – as PM mulls hitting back at Levi’s jeans and Harley Davidsons

UK shares fell today after Keir Starmer and Donald Trump held trade talks amid a frantic last-ditch bid to dodge US tariffs.

Mr Trump has vowed to hit foes and allies alike with levies on so-called ‘Liberation Day’, April 2.

The president complains that taxes such as VAT are unfair on American firms – even though it is charged on all sales, not just imports.

Sir Keir has been trying to negotiate an exemption for the UK with a wider deal, arguing that trade between the two countries is already balanced.

However, he has already failed to head off tariffs on steel and ministers seem increasingly resigned to Britain being included, at least initially.

Downing Street is said to be considering retaliating with extra duties on US goods such as Jack Daniel’s whiskey, Harley Davidson motorbikes and Levi’s jeans. 

The prospect of a trade war has been causing near-panic on global stock markets, with Asia down sharply overnight – and the FTSE 100 dropping 0.75 per cent on opening this morning.   

Keir Starmer and Donald Trump have held trade talks amid a frantic bid to dodge US tariffs

Sir Keir has said the UK ‘reserves the right’ to introduce reciprocal tariffs on the US if a deal to exempt the UK cannot be reached

The prospect of a trade war has been causing near-panic on global stock markets, with Asia down sharply overnight – and the FTSE 100 dropping 0.75 per cent on opening this morning

Downing Street is said to be considering retaliating with extra duties on US goods such as Jack Daniel’s whiskey, Harley Davidson motorbikes and Levi’s jeans

A No10 spokesman said of the call between Sir Keir and Mr Trump last night: ‘They discussed the productive negotiations between their respective teams on a UK-US economic prosperity deal, agreeing that these will continue at pace this week.’

The US president has announced a 25 per cent import tax will be introduced on all cars imported to the US, a measure expected to hit British luxury car makers such as Rolls-Royce and Aston Martin.

Advisers are said to be rowing over whether there should be a 20 per cent ‘baseline’ tariff on all imports from around the world.

The alternative would be ‘reciprocal’ levies targeting individual countries based on their duty systems.

Mr Trump has suggested the EU is his main target, raging that the bloc was created to ‘screw’ America. 

However, the UK currently imposes 20 per cent VAT on most goods and services. 

The National Institute of Economic and Social Research (NIESR) previously estimated that reciprocal tariffs of that scale could knock 0.4 percentage points off UK economic growth for the next two years – equivalent to around £24billion.

That could make or break for the Government’s plans to grow the economy, after Rachel Reeves desperately tried to balance the books with spending cuts in the Spring Statement last week.

The Treasury’s OBR watchdog warned her £9.9billion headroom – historically small – could easily be destroyed by Mr Trump’s trade war.

Mr Trump has vowed to hit foes and allies alike with levies on so-called ‘Liberation Day’, April 2

Ministers say they could bring in their own tariffs on US imports this week. This could affect popular goods like Jack Daniel’s whiskey, Levi’s jeans and Harley Davidson motorcycles.

Sir Keir has said the UK ‘reserves the right’ to introduce reciprocal tariffs on the US if a deal to exempt the UK cannot be reached.

However, the OBR estimated that the impact of imposing reciprocal tariffs on the US would be worse for the UK than allowing the levy to go ahead unimpeded.

Abolishing or reducing the digital services tax on big tech firms, including social media companies, search engines and online marketplaces, is reportedly being considered as part of the negotiations.

Downing Street said Mr Trump passed on his best wishes to the King, who recently had to cancel engagements due to side effects from his cancer treatment.