The UK and the US have a “fair and balanced trading relationship”, Number 10 has said, after Donald Trump claimed the UK is “out of line”.

The American president suggested he is ready to impose tariffs on both the UK and the EU after he announced 25% tariffs on goods from Mexico and Canada, and 10% on China.

The FTSE 100 index of leading UK shares fell sharply on Monday morning after Mr Trump was asked if he will slap levies on Britain too.

He replied: “UK is out of line but I’m sure that one… I think that one can be worked out.”

Politics latest: Starmer meeting EU leaders in post-Brexit milestone

Reacting to that comment, a UK government spokesman said: “The US is an indispensable ally and one of our closest trading partners, and we have a fair and balanced trading relationship which benefits both sides of the Atlantic.

“We look forward to working closely with President Trump to continue to build on UK-US trading relations for our economy, businesses and the British people.”

The US represents 18% (£300bn) of the UK’s trade and the countries are each other’s single largest investors with £1.2trn invested in each other’s economies.

Read more:
How Trump’s tariffs could impact US consumers and UK
Breaking economies could be first step for expansionist Trump
Canada and Mexico hit back with retaliatory tariffs

Mr Trump’s comments and the subsequent market fallout, also seen in Europe, are set to overshadow Sir Keir Starmer becoming the first UK leader to meet all 27 EU chiefs since Brexit.

UK ministers have previously suggested the country could avoid US tariffs as it does not have a trade deficit with Britain.

Despite his threat, Mr Trump had positive words for the UK when he said discussions with the prime minister have “been very nice”.

“We’ve had a couple of meetings. We’ve had numerous phone calls. We’re getting along very well,” he said.

However, he said tariffs will “definitely” be placed on goods from the EU as he said America’s trade deficit with the bloc is “an atrocity” and “they take almost nothing and we take everything from them”.

Following Mr Trump revealing levies on Canada, Mexico and China, but before his UK and EU tariff comments, Sir Keir said: “It is early days. What I want to see is strong trading relations.

“In the discussions that I have had with President Trump, that is what we have centred on – a strong trading relationship.”

Canada, Mexico and China have all vowed to slap tariffs on US goods, sparking fears of a global trade war.

As Donald Trump kicks off his threatened trade war by slapping tariffs on both friends and foes alike, Number 10 is preparing for the moment he turns his attention to the UK.

The unpredictability of the returning president, emboldened by a second term, means the prime minister must plan for every possible scenario.

Under normal circumstances, the special relationship might be the basis for special treatment but the early signs suggest, maybe not.

It was never going to be an easy ride, with Sir Keir Starmer’s top team racking up years of insults against Trump when they were in opposition.

The bad feeling continued when Peter Mandelson was proposed as the UK’s new ambassador to the US – prompting speculation he might even be vetoed.

Amid all of this, the much-anticipated call between the two leaders seemed slow to take place, although it was cordial when POTUS finally picked up the phone last Sunday, with a trip to Washington to come “soon”.

It is against this slightly tense backdrop that the future of transatlantic trade will be decided, with Westminster braced for the impact of the president’s next move.

So, it’s unsurprising that as he waits, Sir Keir will spend the next few days resetting a different trading relationship – with Europe.

In this area, he is on slightly firmer ground, as the spectre of a global trade war makes European leaders want to huddle closer together to weather the storm.

And conversely, the Labour government’s track record works in their favour here, as they cash in their pro-EU credentials and wipe the slate clean after the bad-tempered Boris Johnson years.

Read more:
Lib Dem leader shrugs off Musk insult
Home secretary’s warning about recruiting from abroad

It is still, however, an ambitious and risky endeavour to begin the delicate process of removing some of the most obstructive post-Brexit bureaucracy.

For minimal economic benefits on both sides, the UK must convince the Europeans that they are not letting Britain “have its cake and eat it”.

At the same time, Brexiteers back at home will cry betrayal at any hint that the UK is sneaking back into the bloc via the back door.

To make it even trickier, it must all be done with one eye on Washington, because while a united Europe may be necessary in the Trump era, the prime minister will not want to seem like he is picking sides so early on.

As with so many things in politics, it’s a delicate balancing act with the most serious of consequences, for a prime minister who is still to prove himself.