Reeves Says Trump’s Tariffs Will Hurt UK Even If Britain Secures US Deal

The UK will be hit by the global impact of US tariffs even if ministers succeed in their mission to secure an exemption for British goods, Chancellor of the Exchequer Rachel Reeves said.

The government won’t rush into responding to any tariffs that the White House announces later today, Britain’s finance minister told the House of Commons Treasury Committee on Wednesday. “First of all, let’s see how other countries and other trading blocs respond,” she said.

UK ministers and officials are working hard to secure a new economic deal with the US that would ultimately exempt Britain from President Donald Trump’s tariffs. While Reeves said “we won’t do anything to put that in jeopardy,” she emphasized that even if an agreement is reached, Britain isn’t immune from the global effects of US trade policy and reciprocal tariffs worldwide.

“If we are able to secure an economic agreement with the United States, which we very much want to secure, and are working hard to secure, even if that is possible, it doesn’t mean that somehow we are therefore out of the woods and not impacted by tariffs,” Reeves said. “The specific tariffs on the UK are less relevant to the growth and inflation impacts than the global picture because we are an open trading economy and depressed demand from overseas because of tariffs, higher inflation overseas because of tariffs has a direct impact on the UK.” 

The government is in discussions with the European Union and other countries about their plans, Reeves added. She said she had spoken to European Trade Commissioner Valdis Dombrovskis shortly appearing before the committee. The chancellor also revealed to the panel that she and Business Secretary Jonathan Reynolds met UK exporters in the morning.

“They don’t want the government to rush into any response because the prize on offer is an economic agreement,” she said. “We don’t want to get ahead of ourselves. We are still in discussions with our counterparts in the United States.”

Speaking about her recent spring statement, Reeves said she decided to restore the £9.9 billion margin she enjoyed at the budget in October against her fiscal rule, but that had since been erased by higher borrowing cost and weaker growth, because it was “necessary in an uncertain world.”

“There’s a balancing act when you’re doing a spring statement or a budget,” Reeves said. “Everything being equal, of course it would be nice to have more headroom, but that would require decisions that as a government we weren’t willing to take” around tax rises or spending cuts.

The headroom against her stricture that tax receipts should fund day-to-day government spending was returned to match almost precisely the amount previously set aside. Reeves said that was “by accident, rather than design.”

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