CBI chief Rain Newton-Smith today urges the government to ignore the “siren call of protectionism” and seek ways to engage in practical responses to the trade war.

The chief executive wants the UK government to forge deeper ties with all of the world’s major economic blocs and argues that the UK must act swiftly to secure its place in the future economy.

Her call came as talks between President Trump and China’s President Xi were postponed, casting doubt over whether the leaders can quickly hammer out a deal to avoid a full-scale trade war.

“We must project the UK as a world leader in trade, innovation, and sustainable economic growth,” says Ms Newton-Smith in a speech at the University of Oxford’s Said Business School.

“In the shifting geopolitics of 2025, that may not always be easy. In the coming years, we can expect pressure to divert our course.

“The growing siren calls of protectionism and climate scepticism – we must ignore them. They can only pull us onto the rocks. They are not sustainable for this country. And they are not sustainable for this planet.”

Ms Newton-Smith adds: “There may be tension between the established big blocs – the US, the EU and China. There may be pressure to fall in behind one or more. But we must not. Engagement is always better than protectionism – or sticking our heads in the sand.

“Today we face a host of global challenges that no country or economy can tackle alone. Not only climate change and the energy transition but declining health outcomes and ageing populations. With challenges of this magnitude, our economies must stand together, or they will fall alone. 

“So, when it comes to China, we must be practical. Yes, let’s recognise the security concerns. But full decoupling from China is not realistic and it is not right. It does not sit with our commitment to free and fair trade. And it does not sit with our need to answer the global challenges of 2025.” 

Her address comes in the wake of Donald Trump’s tariffs on China which has retaliated with its own levies in an escalating dispute between the two largest economies in the world.

Mr Trump’s tariffs prompted the Chinese government to announce a range of retaliatory measures, including new duties on a range of US products and antitrust investigations into Google and Nvidia.

Higher tariffs of 25% on Mexico and Canada were delayed by a month following their agreement to increase border controls.

The EU and UK are on alert for similar action from the White House, though Mr Trump has signalled a softer approach to the UK as it has a trade surplus.

The CBI’s call for an easing of tensions with China also follows Chancellor Rachel Reeves’ visit to Beijing to improve trade relations.

Sir Keir Starmer yesterday insisted he was “not choosing” between the US and EU and would seek to develop agreements with both.

European markets were calmer yesterday after sharp falls on Monday, the first day of trading after Mr Trump announced the tariffs over the weekend.

The FTSE 100 edged down 12.79 points (0.2%) to 8,570.77, while Germany’s Dax 40 rose 0.4%, and France’s Cac 40 rose by 0.7%.

On Wall Street, the broadly based S&P 500 rose 0.7%, the Dow Jones Industrial Average was 0.3% higher and the technology-focused ­Nasdaq saw a gain of 1.4%.