UK must choose EU over ‘costly’ Trump trade deal, says ex-ambassador

Ministers are overly optimistic about striking an economic deal to lower tariffs with Donald Trump and should instead move to deepen trade ties with the EU, the UK’s former ambassador to the United States has said.

Sir Kim Darroch said it would be difficult for Britain to get a “clear win” from an American trade deal, while it is likely to be forced to make a “big concession” in areas like taxes on tech giants, online safety or pharmaceuticals.

Hopes for a deal stuttered last week as Trump’s chief economic adviser Ken Hassett said it would take an “extraordinary deal” for any nation including the UK to avoid the 10 per cent tariff baseline still in place and UK Government sources admitted there was no sign of a breakthrough in talks.

Darroch said :“I would just say that I think there’s a lot of misplaced optimism that about this deal. 

“I think it’s inconceivable that the Trump team do a deal with us that doesn’t involve a big concession from us.”

Darroch went on to say a deal would be unlikely without the UK giving way on either agriculture imports from the US, although ministers have ruled out watering down food standards, taxes on tech giants, online safety laws or paying more for American pharmaceuticals.

Sir Keir Starmer confirmed that the Digital Services Tax (DST) which would hit US tech giants such as Amazon, Facebook and X, and implementation of online safety laws were on the table in the talks.

Darroch was US ambassador between 2016 and 2019 but was forced to stand down after messages he wrote criticising the first-term  Trump White House as “inept” and “dysfunctional” were leaked to the press.

Darroch said: “I just don’t see it being a very easy deal, which we can go away with a clear win, because that’s not the way the Trump team negotiate. And they will look for a serious concession.

“If you want a quick win somewhere on UK growth reducing the trade barriers with Europe looks like an absolute no-brainer from my point of view.

“One of the demands that the US is thinking about putting on the table for a trade deal with the UK would be some regulatory disalignment with Europe… that’s not inconceivable, because there are economists in the Trump circle like Stephen Moore who talk about this publicly and say this is one of the big objectives to get us out of the EU orbit.

“I can’t believe the Starmer government would do that, but I can believe it might be on the American wish list.”

A No 10 source however insisted that the PM does not view the question of trade as “either/or” between the US and EU.

“We don’t have to choose one of our allies or another, we’ve obviously got the wider EU reset going on, that is looking at trade and the US is one of our biggest trading partners.”

It came as Chancellor Rachel Reeves called for a new global trading system that defends free trade but supports countries’ economic security, in the face of Trump’s tariffs, and following calls for an economic “coalition of the willing” to counter the levies.

One business source said this could include striking sub-deals with like-minded nations at the World Trade Organisation (WTO) akin to a recent plurilateral agreement on e-commerce.

Writing in The Observer, Reeves said she would use a visit to to Washington to attend the International Monetary Fund’s spring meetings with other finance ministers to argue for “a more balanced global economic and trading system that supports national economies to become more resilient.

“One that recognises the benefits of free and fair trade but also seeks to address the challenges of this new era.”

Reeves over the weekend freed up £20bn of loans for exporters to help companies hit by Trump’s trade war, while temporarily suspending tariffs on 89 products including batteries and fruit juice imported to the UK, to ease the cost of living crisis.