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Sir Keir Starmer has said “all options are on the table” as Britain plans its response to Donald Trump imposing global tariffs on steel and aluminium.
While the European Union has already announced it will introduce counter-measures on American goods, Britain has resisted imposing immediate retaliatory action against the move.
But while the prime minister suggested Britain wants to seek a carve out from the tariffs without engaging in a tit for tat trade war with the US, Sir Keir indicated retaliatory tariffs are being considered.
At prime minister’s questions, Sir Keir said: “I’m disappointed to see global tariffs in relation to steel and aluminium.
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“We will take a pragmatic approach.”
The UK is “negotiating an economic deal which covers and will include tariffs if we succeed,” he told MPs.
“But we will keep all options on the table.”
It came after business secretary Jonathan Reynolds warned Britain “won’t hesitate to respond in the national interest” to the tariffs.
The tariffs, which came into effect overnight, raise a flat duty on steel and aluminium entering America to 25 per cent.
The UK being subjected to a round of global tariffs by Mr Trump overnight is a blow to Sir Keir and his new ambassador to the US Lord Peter Mandelson.
At the press conference after their meeting in the White House last month, the US president praised the prime minister for “negotiating hard” to not have tariffs, while Lord Mandelson made preventing tariffs an early priority as he begins his role.
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Nevertheless, Britain has been dragged into the US trade war despite claims from Brexiteers that leaving the EU would protect the UK from tariffs mainly aimed at the EU.
It leaves the UK outside the two main trading blocs of the EU and US with the potential threat of more tariffs.
The business secretary described the move as disappointing, but said the UK is focussed on a “pragmatic approach”.
He said ministers are “rapidly negotiating a wider economic agreement with the US to eliminate additional tariffs” and “remain resolute in our support for UK industry.”
“This government is working with affected companies today, and I back industry’s application to the Trade Remedies Authority to investigate what further steps might be necessary to protect UK producers”, Mr Reynolds said.
“I will continue to engage closely and productively with the US to press the case for UK business interests. We will keep all options on the table and won’t hesitate to respond in the national interest.”
But the Liberal Democrats said Britain is being “repeatedly kicked by the other side and doing nothing”. “That is not an effective negotiating position,” deputy leader Daisy Cooper said.
She said: “The business secretary needs to toughen up.
“Enough is enough. We must act from a position of strength, standing up for British steel and the UK economy through retaliatory measures.”
Brussels said counter-measures to the tariffs, which would affect around 26 billion euros (around £22bn) of EU exports, will be introduced in April “to defend European interests”.
UK officials have stressed the need for a “cool-headed approach”, after last-ditch efforts to persuade Mr Trump to spare British industry from his global tariffs failed.
But there is growing pressure on the government to follow the EU’s approach and bolster the UK’s trade defences.
Gareth Stace, the director-general of trade association UK Steel, branded the Trump administration’s move “hugely disappointing”, and urged the government to take “decisive action” to protect the industry.
“These tariffs couldn’t come at a worse time for the UK steel industry, as we battle with high energy costs and subdued demand at home, against an oversupplied and increasingly protectionist global landscape”, he said.
“What’s more, the EU is also pushing ahead with trade restrictive action that will amplify the impact of US tariffs.”
Mr Stace added: “It is essential that the UK government not only continues efforts to negotiate exemptions with the US but also takes decisive action to bolster our trade defences.”
Meanwhile, Unite general secretary Sharon Graham called for steel to be “immediately designated as critical national infrastructure to properly protect it”.
“Our government must act decisively to protect the steel industry and its workers following the announcement of US tariffs. This is a matter of national security”, she said.
Steelworkers union Community said Britain must match any measures taken in response to the tariffs by the European Union “at a minimum”.
Assistant general secretary Alasdair McDiarmid said: “We’re incredibly disappointed that the US has decided to take this course of action.”
He warned that the tariffs would be “hugely damaging” for British steelmakers. But he added: “They threaten jobs. For the US it’s also self-defeating, as the UK is a leading supplier of specialist steel products required by their defence and aerospace sectors.”
The prime minister’s official spokesman made clear to reporters after PMQs that “all options are on the table” in responding to Mr Trump’s tariffs.
But he stressed that the government is “prioritising engagement with the United States to stand up for British industry and find a resolution”, rather than seeking to retaliate with tariffs.
“You can expect the business secretary to go to Washington to discuss the wider economic deal [with the US] further, and our focus will be having that engagement to deliver for British industry,” the spokesman added.
Asked whether one of the options being considered is withdrawing Mr Trump’s invite for a second state visit, Sir Keir’s spokesman said that was not being considered.
He added: “We are talking about our bilateral trade relations with the United States.”
And Naomi Smith, chief executive of Best for Britain, urged the government to deepen ties with its European neighbours in order to “shield the UK and Europe from Trump’s tariffs” and “deliver significant economic growth across Britain.”
But Marco Forgione, director general of the Chartered Institute of Export and International Trade, praised the UK government’s response for being pragmatic and potentially leaving the door open for a solution.
He said: “The president is determined to unpick the traditional multilateral administrative system, in pursuit of ‘America First’.
“We’ve seen two approaches, the EU firing back immediately, and which will harm business and consumers.
“But the statement by the UK government is much more pragmatic and opens the door to a positive negotiation with the potential to secure a trade deal with the USA.”
William Bain, head of trade policy, at the British Chambers of Commerce warned that a “series of tit-for-tat tariffs could easily spiral into an all-out trade war and would do the UK little benefit”.
He said: “Today’s setback does not mean we have reached the end of the road in terms of negotiations. Tariffs can be lifted at any time.
“Businesses will be looking to the UK government to continue dialogue, with the US, to resolve this situation and restore certainty for firms, which has been badly lacking over recent weeks.”
