Keir Starmer has been accused of being “too slow” in his efforts to prevent Britain being clobbered by Donald Trump’s trade tariff hammerblow.
Fears are intensifying that the US President will hit the UK – along with other countries – with a massive 20% levy this week.
Global stock markets have plummeted as the so-called April 2 “Liberation Day” approaches.
The US president has already announced a 25% import tax on all cars imported to the US, a measure expected to hit British luxury car makers such as Rolls-Royce and Aston Martin.
This is on top of a series of tariffs set to come into effect on Wednesday, which could include a general tax on UK products in response to the rate of VAT.
The prospect of a trade war triggering a recession has been causing near-panic on global stock markets with the FTSE 100 dropping more than 1%.
Sir Keir has been trying to negotiate an exemption for the UK with a wider deal, arguing that trade between the two countries is already balanced.
However, he has already failed to head off tariffs on steel and ministers seem increasingly resigned to Britain being included.
Downing Street gave another gloomy hint on Monday by saying talks are expected to continue beyond Wednesday.
No10 is said to be considering retaliating with extra duties on US goods such as Jack Daniel’s whiskey, Harley Davidson motorbikes and Levi’s jeans.
Sir Keir’s official spokesman said: “When it comes to tariffs the Prime Minister has been clear he will always act in the national interest and we’ve been actively preparing for all eventualities ahead of the expected announcements from President Trump this week, which we would expect the UK to be impacted by alongside other countries.
“Our trade teams are continuing to have constructive discussions to agree a UK-US economic prosperity deal.
“But we will only do a deal which reflects this Government’s mandate to deliver economic stability for the British people, and we will only act in the national interest.”
Sir Keir and Mr Trump discussed the “productive negotiations” the two nations have had towards an economic deal in a phone call on Sunday.
According to a Downing Street read out of the call, the two leaders agreed that “talks will continue at pace this week”.
But shadow justice secretary Robert Jenrick lashed out at Sir Keir’s handling of the US President.
“I am very worried about jobs in the car manufacturing industry here in the UK, in places like Sunderland, where it is so crucial to the local and national economy,” he told Sky News.
“The Labour government has been too slow to tackle this, they should have been right there with the Trump administration when he was President-elect, beginning those discussions trying to move forward with a trade arrangement which would have insulated the UK from these tariffs.”
The new taxes could make or break the Government’s plans to grow the economy, and they come into force just after Rachel Reeves made a series of cuts at the spring statement in order to restore a narrow buffer in the public spending headroom.
Asked whether the Government would be considering another budget in the event of being hit by tariffs, Sir Keir’s spokesman said: “We’ll obviously always take an approach that suits the British economy.
“We’ll have a budget in the autumn, and the OBR will obviously update the forecast at that point.”
Andrew Griffith, Shadow Trade Secretary, said: “This news is potentially a hammer blow not just to British businesses and workers but to his own Chancellor whose creative accounting at the emergency budget fails to include the impact of tariffs
“Labour claims talks with the US are going ‘well’. But, if this is what well looks like, I wouldn’t like to see what the opposite looks like.
“The Prime Minister has so far failed to come up with the goods, he needs to rekindle our US trade deal. This is just further proof that, when Labour negotiates, Britain loses.”