US treasury secretary used a breakfast meeting with the chancellor to warn Javid directly against applying the new tax as part of his forthcoming budget. The confrontation comes as the US mounts a last-ditch attempt to stop Britain using technology from China’s Huawei in its 5G network, the Guardian reported.

The US president again pressed UK Prime Minister Boris Johnson not to give the green light to the use of Huawei technology, despite reassurances from Britain’s security services that they can mitigate any security risks posed by the company.

It is among a mounting number of issues developing with the US in the run-up to trade deal talks later this year.

Speaking at Chatham House, in London, Mnuchin revealed that he had raised his concerns about the proposed digital services tax, which would mean a two percent levy being applied to sales of big tech firms, during a meeting at 11 Downing Street. “We believe that the [digital services tax] is a discriminatory tax,” he said. “We don’t think it’s appropriate.” He added that such a tax contained “violations to our tax treaties”.

“We’re working through that and I think we have a good outcome of trying to give some room now in 2020 to continue these discussions,” he said.

The UK has become isolated over the issue of a digital services tax after France announced it would drop its plan for a three percent levy on the revenues of large technology companies. Javid has so far resisted calls to ditch his version of the tax, although he has said it would be lifted once an international solution to taxing big tech companies was agreed. Going ahead with the levy is likely to provoke retaliation from the US, most likely in the form of tariffs on cars.

During the meeting with Javid, US treasury secretary also reiterated concerns about the UK’s use of Huawei technology, due to be confirmed this week. He warned that it raised concerns about security and privacy. “If you look at the role of technology, it is critical that we have infrastructure that is protected,” he said. “And we have important relationships, and I think what’s clear is for the role of government and the role of national security issues and the role of defense, we want to make sure our infrastructures are protected.

“As more and more things are connected to the network and to the grid, these national security issues go beyond the traditional aspects and go into various different aspects. I think the real issue for us is making sure that the networks and infrastructure are properly protected.”

The lobbying from the Trump regime will continue this week when Mike Pompeo, the US secretary of state, meets the prime minister and Dominic Raab, the foreign secretary.

The skirmishes could make it harder for Britain to secure a comprehensive trade deal with the US. However, Mnuchin said he was ‘quite optimistic’ a deal could be done this year and that US-UK trade would increase. He said the US was “prepared to dedicate a lot of resources” to securing a post-Brexit trade deal.

“The UK and the US have very similar economies with a big focus on services, and I think this will be a very important relationship,” he said. “And this is going back to the president during the campaign. He said, post-Brexit, they’ll be at the top of the list.”

“There will not be alignment, we will not be a rule-taker, we will not be in the single market and we will not be in the customs union — and we will do this by the end of the year,” Javid said in an interview with the Financial Times.

Javid’s comments, coupled with a report in the Daily Telegraph that Prime Minister Boris Johnson is planning to formally open trade talks with the US as soon as next month, suggest Britain is seeking to put early pressure on the EU’s trade team even before the UK officially quits the bloc on Jan. 31.

The UK government is speeding up plans for trade negotiations with the US, the Telegraph reported, with civil servants preparing advice for ministers and Johnson poised to seek authorization from the cabinet to start talks with the US next month possibly during a trip to Washington.

Any move to start negotiations with the US before trade talks with the EU get fully underway could send a strong message to the EU that the UK economy wants to break free of European regulations after Brexit. It could also further complicate discussions with Brussels.

Talks with the EU already face a daunting schedule this year, with the EU probably agreeing on its formal negotiating mandate only in late February and the official transition period expiring on Dec. 31. Johnson said that deadline is immovable, while EU Chief Negotiator Michel Barnier calls it ‘extremely challenging’.

German Chancellor Angela Merkel has warned that the further the UK goes it alone, the more it will be regarded in Brussels as a direct competitor.

The debate over how much Britain will diverge from the EU with regard to regulatory standards is set to form a key plank for how the progress of the talks — a no-deal Brexit could create border delays and increase costs for carmakers and other manufacturers.

“There will be an impact on business one way or the other, some will benefit, some won’t,” Javid said, urging companies to adjust their strategies accordingly. He plans to back more projects in regions outside London and the southeast, and pump more funds into training the country’s workforce.

The government must do more to spell out how the UK intends to diverge from the EU, according to Claire Walker, co-executive director of the British Chambers of Commerce.

“Uncertainty around the extent of divergence risks firms moving their production elsewhere,” Walker said. “The government must clearly communicate these changes in a timely way and provide substantial support to help firms adopt.”

As for the UK’s finances, Javid said he wants to bolster growth rates to between 2.7 percent and 2.8 percent a year. Improving productivity, which has been a brake on the economy for several years, is also an issue he’s seeking to address, he told the FT.

Labour’s John McDonnell said on Twitter that trade will be harmed, putting jobs at risk.

“Fears now made real about food price increases and threats to jobs in motor industry and manufacturing. Right Ideology overriding common sense,” McDonnell said in response to Javid’s comments.