As the UK’s chancellor of the exchequer, Rachel Reeves embarks on a high-stakes mission to persuade Donald Trump’s administration to reduce tariffs on key British exports, with a deal ready to be signed but pharmaceutical tariffs posing a wildcard threat.
Rachel Reeves, the UK’s chancellor of the exchequer, is set to embark on a series of high-stakes meetings with her US counterpart ‘Scott Bessent’ in Washington this week. Her mission: to persuade Donald Trump‘s administration to reduce tariffs on key British exports such as steel, cars, and aluminium.
A Deal Ready to Sign, But Tariffs Remain a Wildcard
According to UK government sources, an agreement is ready to be signed, but the fate of the deal hangs in the balance due to Trump’s threat to impose tariffs on pharmaceutical imports. These products are the UK’s second-largest export to the US, worth around £7 billion.
The draft text of the trade deal has been agreed upon, with the UK offering relief from 25% tariffs on steel, aluminium, and cars in exchange for a reduction in the headline rate of digital services tax paid by US companies. However, officials acknowledge that Trump’s decision is unpredictable, and the agreement may need to be renegotiated if pharmaceutical tariffs are imposed.
Chancellor Reeves’ Task: Lobbying the President
Reeves’ task is largely lobbying one, with officials saying they are no longer seeking to negotiate the terms of the deal with their US counterparts. Instead, she aims to put pressure on Trump to sign the agreement, which could have significant implications for British businesses and the economy.
While some UK manufacturers may benefit from a trade deal, others fear that it could lead to job losses if companies relocate production to countries with lower tariffs. The ‘International Monetary Fund (IMF)’ has also weighed in, warning that Trump’s tariffs are likely to weigh down on growth in the UK, although its chief economist ‘Pierre-Olivier Gourinchas’ noted that domestic factors are a bigger concern.
A Trade Deal: What Does it Mean for the UK Economy?
Even if Reeves is successful in persuading Trump to sign the trade agreement, it may not have a significant impact on the economic outlook. The IMF has already downgraded its forecast for British growth this year from 1.6% to just 1.1%, citing domestic factors such as government borrowing costs and higher energy costs.
Reeves’ task over the next few days will be to persuade the ‘IMF’s economists’ to factor in what the government is doing to boost growth, including liberalising the planning system.
- theguardian.com | Reeves flies to US to push Trump to sign trade agreement
