The Government is dreading a long-term Brexit-style standoff over tariffs despite its relief over Donald Trump’s decision to pause his plans for 90 days, writes John Drennan.

Despite the relief about President Trump’s row-back, one senior Government source warned a Brexit-style standoff could be equally damaging.

“It is a good thing that we were not plunged into an immediate and terrible war but the last thing we need is some form of Brexit either,” they said.

They also said the “complexities of world trade mean a short, sharp imposition of tariffs was never going to be feasible”, adding: “The realities of a global economy means that is impossible.

“There is a sense that America underestimated the consequences of tariffs.

“They have found themselves facing a war on two fronts and that they have bitten off more than they can chew.

“The reality is that this will be more like Brexit. It will not be an overnight process unless Trump really is going for a quick smash and grab.

“Brexit was long but there was no massive disruption during it, well except for the UK, but this will be worse if it’s prolonged.”

They said a ceasefire “is great”, but added: “The problem is you still have a 10% tariff and if you’re exporting and your margin is 8 to 10%, you are in trouble.

“There are a lot of companies in that basket.”

Another Cabinet source added: “With the dollar decreasing and bond markets all shook up and inflation going way up in the USA and 145% tariffs, surely even Trump can see this should be closed off in the 90 days.”

Political concern is especially high over the vulnerability of the pharma sector in the event of an ongoing tariff war.

It is a priority for Enterprise Minister Peter Burke, who said: “This is a very significant challenge to our economy.”

One senior Government source warned: “Until we have a settlement, there is always the danger of an escalation, either by America or Europe, with pharma being used as the nuclear option in any negotiation.

“The need for a swift conclusion will be one of the key defining themes that will be used to clarify our strategy during negotiations. The other big themes are: calm and measured, Europe acting in concert, controlling what we control, and avoiding another Brexit.”

In the first example of “controlling what we can control”, Minister Burke will be bringing a strong pro-business package to Cabinet today.

One source said: “There will be a memo which will ensure the action plan for competitiveness will be brought forward for implementation this summer.

“It is about setting out up to 15 quick wins to do now which will send a strong signal to the enterprise economy that the Government is listening to business.”

Controversy has grown over plans to halt domestic reforms in sick leave and introducing a living wage.

One minister said: “We have to put our own house in order and protect business.”

The plan includes:

• publishing the national semiconductor (computer chips) strategy within a month;
• establishing a mechanism for security clearance so firms can access European funds;
• publishing the Commission for Regulation of Utilities policy on data-centre connections;
• bringing forward the energy policy for new grid connections in conjunction with the Department of the Environment;
• establishing the cost-of-business advisory forum;
• pausing sick leave increases (now done);
• urgently progressing legislation to ratify CETA, a Canada-EU trade deal;
• enhanced supports for market diversification;
• and greater productivity for exporting companies.

One minister warned: “A key message we need to send is that we are open for business when it comes to their needs.”