Sir Keir Starmer faces warnings that his Government's plans to ban alcohol advertising could derail the recently negotiated trade agreement with the United States.
American drinks companies have shared concerns that the proposed restrictions would create non-tariff barriers to trade, prompting expectations of formal intervention from Washington.
The potential threat to the trade deal, which the Prime Minister agreed to with Donald Trump in May and which reduced US tariffs on British cars and steel, has raised concerns in Downing Street.
The agreement was previously celebrated as a diplomatic success for Keir Starmer.
Sir Keir Starmer faces warnings that his Government's plans to ban alcohol advertising could derail the recently negotiated trade agreement with the United States
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Industry sources report that the proposals have sparked "absolute fury" in boardrooms across multiple sectors, including sports and media companies that rely heavily on alcohol advertising revenue.
US drinks companies believe the ban would place them at a significant disadvantage, as it would prevent them from launching and marketing new brands in the UK while established British brands maintain their market position.
This concern has led to expectations that formal dispute mechanisms under the US-UK trade deal will be triggered.
Rufino Hurtado, the senior trade representative at the US mission to the EU, is expected to raise the issue at a meeting of US and UK trade delegates this week.
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American drinks companies have expressed concerns that the proposed restrictions would create non-tariff barriers to trade
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He will seek additional information about the proposals, which are anticipated to be included in the NHS 10-year plan due for publication later this week.
A source close to the talks said: "If Ireland backing down on labels was a skirmish, this would be a full-blown trade war. Washington views this kind of policy as protectionism in disguise, and they will retaliate."
Major American drinks companies including Brown-Forman, owner of Jack Daniel's whiskey, have already written to Jonathan Reynolds, the Business Secretary, to express their objections.
Other firms including Diageo, which owns Guinness, and AB InBev, owner of Budweiser, are warning of lost investment, cancelled sports sponsorships and retaliatory action under the trade deal.
US drinks companies believe the ban would place them at a significant disadvantage
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The alcohol industry spends nearly £1billion annually on advertising and marketing in the UK, with the sector worth £40billion per year.
US brands currently represent approximately four per cent of the market and are seeking to expand their share.
Andrew Griffith, the shadow business secretary, said: "Labour's plan to ban alcohol advertising isn't just anti-business, it's anti-trade and anti-free speech.
"America is one of our closest allies and largest economic partners. Threatening a new UK-US trade deal within weeks of signing it is recklessly short-sighted."
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