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.".

Markets tumble in reaction to Trump's tariffs as he warns UK 'out of line' on trade with US. US secretary of state says Panama must reduce Chinese influence on canal or face consequences. Breaking economies could be just the first step for expansionist Trump. 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 UKBreaking economies could be first step for expansionist TrumpCanada and Mexico hit back with retaliatory tariffs. Please use Chrome browser for a more accessible video player. 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. Mr Trump also 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".

Be the first to get Breaking News. Install the Sky News app for free. 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.