The UK and US have a “fair and balanced trading relationship which benefits both sides of the Atlantic”, Downing Street has said.

The comments come after US President Donald Trump imposed trade tariffs – taxes on goods imported from other countries – of 25% on neighbours Canada and Mexico, and threatened similar action against the EU.

Asked about the UK, Trump told the BBC the trade relationship has been “out of line” but could be “worked out”.

Prime Minister Sir Keir Starmer is in Brussels for a meeting of EU leaders as part of an ongoing bid to “reset” relations, including exploring close ties on trade.

However, if the UK forges stronger links with the EU, that could anger the US and risk the UK getting caught up in a trade war. Similarly the EU might object to Sir Keir siding with the US rather than its European neighbours.

Asked about the relationship with the US, No 10 said the prime minister trusts Trump and pointed to “a really constructive early set of conversations” between the two men.

“We’ve got a fair and balanced trading relationship which benefits both sides of the Atlantic,” the spokesman added.

“It’s worth around £300bn and we are each other’s single largest investors, with £1.2tn invested in each other’s economies.”

Following Trump’s tariffs announcements over the weekend, European and Asian stock markets fell, with car manufacturers particularly badly hit.

The UK was also impacted but to a lesser effect than the EU.

Analysis produced last year by the University of Sussex suggested the the UK could face a £22bn hit to exports if the US imposed a blanket 20% tariff on all imports.

The top goods exported from the UK to the US include cars, medicinal and pharmaceutical products and mechanical power generators.

Trump believes imposing tariffs will help grow the US economy and protect jobs, however it could lead to consumers paying more as prices adjust to the taxes.

Other leaders reacted angrily with Canada immediately announcing retaliatory tariffs of 25%.

French President Emmanuel Macron said that if EU interests were attacked, the trading bloc would have to “make itself respected and thus react”.

EU foreign policy chief Kaja Kallas said: “There are no winners in trade wars.”

If there’s a trade war with the US, “then the one laughing on the side is China”, she added.

Speaking on Sunday, Sir Keir was more cautious than his EU allies, saying: “It is early days. What I want to see is strong trading relations.”

Asked if he would put tariffs on the UK, President Tump said: “UK is out of line but I’m sure that one… I think that one can be worked out.”

He added that his discussions with the British prime minister had “been very nice” adding: “We’ve had a couple of meetings. We’ve had numerous phone calls. We’re getting along very well.”

The UK wants to build stronger trade links with the US but also the EU which is part of the motivation for the prime minister’s trip to Brussels.

The focus of the summit is defence, but the UK also wants to discuss easing restrictions on the trade of food and animal products and cooperation on emission trading schemes.

The mutual recognition of professional qualifications and allowing touring musicians to travel more easily are also areas of interest.

The EU is keen to set up a youth mobility scheme, which would make it easier for young EU citizens to study and work in the UK and vice versa. However, ministers have so far rejected the idea.

Downing Street has not ruled out joining the Pan-Euro-Mediterranean Convention, which would allow tariff-free trade on some goods.

The Conservatives have accused the government of “trying to reopen the divisions of the past and edge us back into the EU”.

In contrast, Liberal Democrat leader Sir Ed Davey has been urging the government to negotiate a new UK-EU customs union, allowing tariff-free trade between the two sides.