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UK Dreams of US Trade Deal before Trump Tariffs

UK Prime Minister Keir Starmer (L) met with US President Donald Trump (R) at the White House in February 2025. CARL COURT / GETTY IMAGES NORTH AMERICA/AFP
UK Prime Minister Keir Starmer (L) met with US President Donald Trump (R) at the White House in February 2025. CARL COURT / GETTY IMAGES NORTH AMERICA/AFP
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UK Dreams of US Trade Deal before Trump Tariffs

UK Prime Minister Keir Starmer (L) met with US President Donald Trump (R) at the White House in February 2025. CARL COURT / GETTY IMAGES NORTH AMERICA/AFP
UK Prime Minister Keir Starmer (L) met with US President Donald Trump (R) at the White House in February 2025. CARL COURT / GETTY IMAGES NORTH AMERICA/AFP

Britain's government is hoping to reach a last-minute post-Brexit trade agreement with Washington to avoid -- or at least mitigate -- more tariffs set to be announced on Wednesday by US President Donald Trump.
Current position?
Britain has set out to strike a trade deal with the United States since departing the European Union at the start of the decade, but had been unsuccessful under the previous Conservative government.
Prime Minister Keir Starmer, leader of the Labor party that won power in July, visited Washington at the end of February and came away hopeful an accord could be reached.
Trump himself held out the prospect of a "great" deal that could avoid tariffs on Britain, hailing Starmer as a tough negotiator.
Talks have continued, with Business Secretary Jonathan Reynolds recently visiting Washington, while Starmer and Trump took up the baton in a phone call earlier this week.
It is thought that the UK government wants to agree some kind of trade deal ahead of April 2 -- termed "Liberation Day" by Trump, when he is set to unveil supposedly "reciprocal" tariffs, tailored to different trading partners.
It would follow Trump's announcement this week of imposing steep tariffs on imported vehicles and auto parts, vowing retaliation as trade tensions intensify and price hikes appear on the horizon.
"We're engaged in discussions with the United States about mitigating the impact of tariffs," Starmer said heading into the weekend.
Finance minister Rachel Reeves on Thursday said Britain would not seek to "escalate" trade wars, in contrast to strong comments by other major economic powers that hinted at retaliation in response to the auto-sector tariffs.
What kind of deal?
Downing Street has described a potential agreement as an "economic prosperity deal", indicating it will fall short of a free trade deal ultimately sought by London.
As it stands, the United States is the UK's single largest country trading partner.
"Some type of arrangement that might let the UK escape some tariffs is possible but it would not be a full-scale trade deal," Jonathan Portes, professor of economics at King's College London, told AFP.
"Brexit is a double edged sword -- it gives us more flexibility and we can negotiate with a view to our own interests.
"But equally, it means we have less weight than as part of the EU and moreover we cannot afford to agree to anything that complicates our trading relationship with the EU," Portes added.
What could the UK concede?
UK media has reported that London may scrap a tax on tech giants to avert US tariffs under Trump and clear a pathway to a trade deal.
Starmer in response stressed that "in the end, our national interest has to come first, which means all options are on the table".
His spokesman added that the UK will "make sure that businesses pay their fair share of tax, including businesses in the digital sector".
The digital tax is currently worth about £800 million ($1 billion) annually to the UK Treasury.
Reynolds conceded that the digital tax is not "something that can never change or we can never have a conversation about".
Portes, along with David Henig, director of the UK Trade Policy Project, pointed to the risk of altering Britain's tax policy in return for a promise from Trump over tariff exemptions.
"If Trump keeps his word and the UK gains significant benefits as a result, then eliminating a tax could be a good deal," Henig told AFP.
"That, however, is quite a gamble."

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Canada’s Liberals Win Minority Government; Carney Says Old Relationship with US ‘Is Over’ 

Canadian Prime Minister Mark Carney speaks on stage at his campaign headquarters after the Liberal Party won the Canadian election in Ottawa on Tuesday, April 29, 2025. (Justin Tang/The Canadian Press via AP)
Canadian Prime Minister Mark Carney speaks on stage at his campaign headquarters after the Liberal Party won the Canadian election in Ottawa on Tuesday, April 29, 2025. (Justin Tang/The Canadian Press via AP)
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Canada’s Liberals Win Minority Government; Carney Says Old Relationship with US ‘Is Over’ 

Canadian Prime Minister Mark Carney speaks on stage at his campaign headquarters after the Liberal Party won the Canadian election in Ottawa on Tuesday, April 29, 2025. (Justin Tang/The Canadian Press via AP)
Canadian Prime Minister Mark Carney speaks on stage at his campaign headquarters after the Liberal Party won the Canadian election in Ottawa on Tuesday, April 29, 2025. (Justin Tang/The Canadian Press via AP)

Canadian Prime Minister Mark Carney's Liberals retained power in the country's election on Monday, but fell short of the majority government he had wanted to help him negotiate tariffs with US President Donald Trump.

The Liberals were leading or elected in 167 electoral districts, known as seats, followed by the Conservatives with 145, with votes still being counted.

The Liberals had needed to win 172 of the House of Commons' 343 seats for a majority that would allow them to govern without support from a smaller party.

"Our old relationship with the United States, a relationship based on steadily increasing integration, is over," Carney said in a victory speech in Ottawa.

"The system of open global trade anchored by the United States, a system that Canada has relied on since the Second World War, a system that, while not perfect, has helped deliver prosperity for our country for decades, is over," he added. "These are tragedies, but it's also our new reality."

Carney said the coming months would be challenging and require sacrifices.

Shachi Kurl, president of the Angus Reid Institute, a polling firm, told Reuters the Liberal win hinged on three factors.

"It was the 'anybody-but-Conservative' factor, it was the Trump tariff factor, and then it was the Trudeau departure ... which enabled a lot of left-of-center voters and traditional Liberal voters to come back to the party," Kurl said, referring to the resignation of unpopular former Prime Minister Justin Trudeau.

Carney had promised a tough approach with Washington over its import tariffs and said Canada would need to spend billions to reduce its reliance on the US. But the right-of-center Conservatives, who called for change after more than nine years of Liberal rule, showed unexpected strength.

Minority governments in Canada rarely last longer than 2-1/2 years.

Conservative leader Pierre Poilievre conceded defeat to Carney's Liberals and said his party would hold the government to account.

The result capped a notable comeback for the Liberals, who had been 20 percentage points behind in the polls in January before Trudeau announced he was quitting and Trump started threatening tariffs and annexation.

"America wants our land, our resources, our water, our country," Carney said. "These are not idle threats. President Trump is trying to break us so America can own us. That will never ever happen."

WAVE OF PATRIOTISM

Trump's threats ignited a wave of patriotism that swelled support for Carney, a political newcomer who previously led two G7 central banks.

Trump re-emerged as a campaign factor last week, declaring that he might raise a 25% tariff on Canadian-made cars because the US does not want them. He said earlier he might use "economic force" to make Canada the 51st state.

Carney has emphasized that his experience handling economic issues makes him the best leader to deal with Trump, while Poilievre tapped into concerns about the cost of living, crime and a housing crisis.

Trump, in a social media post on Monday, reiterated his call for Canada to become the 51st state.

"Good luck to the Great people of Canada," he said. "Elect the man who has the strength and wisdom to cut your taxes in half, increase your military power, for free, to the highest level in the World, have your Car, Steel, Aluminum, Lumber, Energy, and all other businesses, QUADRUPLE in size, WITH ZERO TARIFFS OR TAXES, if Canada becomes the cherished 51st State of the United States of America. No more artificially drawn line from many years ago."

Tensions with the US have caused supporters of two smaller parties, the left-leaning New Democratic Party and the separatist Bloc Quebecois, to shift to the Liberals. NDP leader Jagmeet Singh conceded defeat in his own district and said he planned to quit as party leader.

The Conservatives appeared on track to make gains in the seat-rich Toronto area to prevent a Liberal majority government, but Poilievre was trailing in his own Ottawa-area district, with votes still being counted.

"We didn't quite get over the finish line yet," Poilievre told his supporters in Ottawa. "We know that change is needed, but change is hard to come by. It takes time."

The Liberals are the last party to win four consecutive elections in Canada, accomplishing the feat in 2004.

Poilievre focused his campaign on domestic issues and the need to fix a country that he said the Liberals had "broken."