30 March 2025, 13:22 | Updated: 30 March 2025, 13:30
Jonathan Portes tells Ali Miraj how Starmer should respond to tariffs
A top economist has warned that “playing hardball” with the US on tariffs will hurt the UK, as Yvette Cooper said that the trade barriers could harm the entire global economy.
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Jonathan Portes told LBC’s Ali Miraj that Keir Starmer is right to put the UK’s national interest first in talks with the US over tariffs, some of which are set to come in on Wednesday.
But the prominent economist and former senior civil servant said that “playing hardball in the sense of deliberately raising tariffs across the board… would frankly do significantly more damage to the UK economy than it would do to the US”.
Donald Trump announced this week that a 25% import tax would be introduced on all cars imported to the US, a measure expected to hit British luxury carmakers such as Rolls-Royce and Aston Martin.
The levy is on top of a series of reciprocal tariffs set to come into effect on April 2, which could include a general 20% tax on UK products in response to the rate of VAT.
Read more: Donald Trump announces 25% tariffs on all imported cars
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The new trade taxes come into force just after Rachel Reeves made a series of spending cuts at the spring statement in order to restore a narrow buffer for her public spending plans.
Mr Portes, who was previously chief economist at the Cabinet Office and the Department for Work and Pensions, said: “The government will have to be quite careful, quite measured, probably try and coordinate, at least to some extent, with our European partners and be very careful.
“I mean, the basic point here, of course, is that Trump is not acting in a way that is rational either by… economic standards, but not even by any sort of conventional political standards either. And that means that the conventional rules don’t apply.
“You just have to try and avoid as much damage as possible.”
Starmer says ‘all options are on the table’ as UK weighs response to US car tariffs
The Office for Budget Responsibility (OBR) has warned the impact of reciprocal tariffs would be worse for the UK than allowing the levy to go ahead unimpeded.
Ministers are currently attempting to negotiate an exemption from the tariffs, with reports suggesting a tax on American big tech companies could be reduced or even abolished in exchange for a carve-out on British imports to the US.
It comes as Yvette Cooper reiterated the Prime Minister’s message that “no option is off the table” when it comes to responding to the tariff plans.
Ms Cooper said: “In the end, if you increase barriers to trade right across the world, that’s not good for the world economy, let alone any individual country as part of that.
Economist accuses Republican of being ‘completely wrong’ on Trump tariffs
“So that’s why our approach to this has been to try and seek new trade agreements across the world, including improving our trading relationship with the EU, as well as with the US.”
Discussions with the US over exemptions from the levy are “intense”, she said.
Ms Cooper added: “We obviously can’t keep a running commentary on different discussions that are taking place, but we have to always make sure that we’re acting in the national interest.”
Part of the problem appears to be that the Trump administration has shifting priorities for its tariff regime. Several tariffs have been announced in recent months before being postponed or changed.
Dmitry Grozoubinski, a trade expert and founder of ExplainTrade training service, said that the Trump administration “so far seems like it is less willing to do transactional deals in advance of these tariffs.”
He told LBC’s Iain Dale: “I think there’s a sense that they want to roll out the pain and then negotiate it away rather than letting people get out from under it in advance.
“What makes this so hard to predict is that the administration has been incredibly unclear about what its actual goals are and what it actually wants from a lot of its trading partners, including the United Kingdom.
“So it is a matter… of representatives from the UK going over there and either blind-bidding or trying to work out what a deal could look like. And that’s always a difficult place to be.”