Chancellor Optimistic on Trade Deal, Dismisses Need for Tariffs
Chancellor Rachel Reeves has expressed confidence that the UK and the US can reach a trade agreement, avoiding punitive tariffs on British businesses. She believes tariffs will not be necessary, as the two countries maintain a balanced trade relationship.
Reeves revealed that she had spoken with US Treasury Secretary Scott Bessent and was "strongly" convinced that both nations could collaborate effectively on trade. Her remarks come amid concerns over President Donald Trump’s pledge to impose tariffs on countries with which the US runs a trade deficit.
On Monday, the US president imposed a 25% tariff on imported steel and aluminum. However, Reeves remains optimistic that the UK will not be subject to similar measures. Speaking on Matt Forde’s political podcast, she emphasized the deep economic ties between the two nations:
"I believe we will maintain a good relationship, which is crucial since the US is our largest trading partner. A million British people work for American companies, and a million Americans work for British companies. Our economies are deeply interconnected."
Reeves reiterated her support for free trade, arguing that it benefits both nations. Unlike many other countries, the UK does not run a trade surplus with the US, a key factor in Trump’s trade policy.
"I understand why President Trump is concerned about trade imbalances, but we are not contributing to that issue. That’s why I believe a deal can be reached," she said.
Regarding steel tariffs, she highlighted the significance of the sector to the UK economy, noting that 10% of British steel exports go to the US. She emphasized the mutual benefits of steel trade and expressed confidence that an agreement could be struck.
"I strongly believe a deal can be done," she added, confirming that she would meet Bessent at the upcoming G20 finance ministers' conference.
A More Positive Outlook
Reeves also acknowledged the need for a more optimistic approach to the British economy in light of Trump’s electoral victory. She noted that Trump’s success was largely driven by his focus on jobs, whereas the Democrats had prioritized niche issues.
Critics have accused Reeves of being too pessimistic about the UK economy early in her tenure. However, she said she had been making a conscious effort to adopt a more positive outlook since the start of the year.
"I'm still working on it—it's mid-February now—but I’m trying to be more positive," she admitted. "We inherited a difficult situation, and it’s hard not to acknowledge that. But I’m focusing on the enormous potential we have—our businesses, skills, and universities."
She even joked about taking inspiration from the American approach:
"I’m trying to channel my inner American and be more upbeat about our future."
Discussing the US election, Reeves noted that Trump’s messaging resonated with working people, while the Democrats struggled to address the issues that truly motivated voters.
"Every time you heard Donald Trump, he was talking about making working people better off. The Democrats, unfortunately, weren’t always focused on those core economic concerns," she said.
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