Rachel Reeves has declined to back calls for the UK government to launch a “buy British” campaign in response to Donald Trump’s tariffs, saying it would make Britain too “inward-looking”.

However, Downing Street said the Cabinet Office was examining procurement rules and said there were already policies in place to incentivise using the government’s purchasing power for British companies.

The chancellor and Downing Street said they would not be calling for British shoppers to do the same, despite a campaign from the Liberal Democrats. Canada launched a buy Canadian campaign in response to a 25% US tariff on Canadian imports.

During Treasury questions on Tuesday, the Lib Dems’ deputy leader and Treasury spokesperson, Daisy Cooper, asked the government to “commit to a ‘buy British’ campaign as part of a broader national effort to encourage people to buy British here at home”.

Reeves replied: “In terms of buying British, I think everyone will make their own decisions. What we don’t want to see is a trade war, with Britain becoming inward-looking, because if every country in the world decided that they only wanted to buy things produced in their country, that is not a good way forward.”

The prime minister’s spokesperson backed Reeves and said there were no plans for the government to launch a buy British campaign. He said the government “will always back British manufacturers” but it was up to individuals to decide what they wanted to buy.

Asked if the government would advise people to avoid US products, he said that would not be consistent with Britain being an “open, trading nation” and the government was “not going to tell people where they buy their stuff”.

He said: “That is something the prime minister and the chancellor have previously said, and we want to see fewer trade barriers around the world, such that we’re continuing to support our economy. At the same time, we also continue to prioritise and support British manufacturers, British producers.

“We have a significant programme of support, whether it’s farmers, whether it’s manufacturers, as yesterday with supporting the car industry. So, we can take a two-pronged approach. We can be an open trading nation whilst also supporting British producers and manufacturers.”

Cooper said Reeves’s comments were “an insult to businesses being pushed to the brink by Donald Trump’s trade war”. She said: “This is completely out of touch with the British people who are rallying behind local businesses in their time of need.

“Instead of talking down our high streets, the government needs to send a clear message to the White House that they stand squarely behind British businesses and against Trump’s damaging tariffs. Buying British is a powerful way that people can get behind local businesses and show that as a country we won’t give in to Donald Trump’s bullying.”

Reeves fronted a plan to “make, buy and sell more in Britain” in 2021 when Labour was in opposition, promising to award more public contracts to British businesses and pass a law requiring public bodies to report on how much they are buying from British businesses including small and medium-sized enterprises.

No 10 said the government did want to move towards more British procurement. “We already have got significant ambitions to ensure that we’re supporting British industry,” the spokesperson said. “Obviously, I can’t get ahead of procurement rules and all of that, but it is important that the government is using its weight as a procurer to support British industry, and that will definitely be part of our agenda.

“There’s a lot of work across government to ensure we’ve got the most active, effective state possible that is supporting the economy, that is delivering value for money for taxpayers. We’re always going to back British manufacturers and producers whilst also ensuring that we’re an open trading nation that is exporting around the world.”