The chancellor says she “understands what President [Donald] Trump wants to address” with his tariffs, ahead of talks with her US counterpart in Washington on Friday.
Rachel Reeves said there were similarities with the way both the US and UK governments had come to power off the back of voter frustration with the economy.
Speaking to BBC Economics Editor Faisal Islam ahead of her meeting with US Treasury Secretary Scott Bessant on Friday, Reeves said the government was working “flat out” to secure a trade deal with the US.
Earlier this week, she signaled the UK could lower tariffs on US car imports from their current 10% to 2.5% as part of a wider deal.
“We’re all grappling with this issue of tariffs but I think that there is an understanding why President Trump wants to address some of the global imbalances there are in the system,” she said.
Trump has already imposed tariffs of 25% on all car imports to the US including from the UK.
The UK also faces a broader tariff rate of 10% and is looking to negotiate an agreement with the US administration, along with dozens of other countries hit with even higher levies – most of which are currently on pause until July.
Some US officials have been positive about the prospects of a deal. Last week US Vice-President JD Vance said there was a “good chance” a trade deal could be reached with the UK.
Reeves said she had also been working closely with European and Canadian counterparts to remove trade barriers, and that conversations around the table at G20 meetings this week had been difficult:
“Obviously there are strains. We are all following what’s happening in our domestic bond markets, in our equity markets, and we all know that that uncertainty is bad for investment in the UK economy.”
Reeves went on say there would not be any celebrations if the UK got a deal as other countries were still affected.
Despite the chancellor’s focus on talks with the US, she suggested that moving closer to the EU on trade was a bigger priority. The UK is preparing for a summit with the EU in May in an attempt to “reset” the relationship between the two.
“I understand why there’s so much focus on our trading relationship with the US but actually our trading relationship with Europe is arguably even more important, because they’re our nearest neighbours and trading partners,” she said.
“Obviously I’ve been meeting Scott Bessent this week whilst I’m in Washington, but I’ve also this week met the French, the German, the Spanish, the Polish, the Swedish, the Finnish finance ministers, because it is so important that we rebuild those trading relationships with our nearest neighbours in Europe, and we’re going to do that in a way that is good for British jobs and British consumers.”
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