UK's Reeves says trade with US can flow amid Trump tariff threats

By Andy Bruce

British finance minister Rachel Reeves said on Wednesday she was confident that U.S.-UK trade and investment would not be derailed as President Donald Trump threatens to retaliate against what he sees as barriers to U.S. exports.

Prime Minister Keir Starmer is due to meet Trump in Washington on Thursday with the risk of trade tariffs one of the key issues on the table.

"The last time President Trump was in the White House, trade and investment flows between our two countries increased, and I've got every confidence that that can happen again," Reeves told Reuters in an interview on the sidelines of a Group of 20 finance chiefs' meeting in South Africa.

Trump has said value-added taxes levied by European countries represent an unfair barrier to U.S. exports. Asked if Britain was likely to change its tax regime, Reeves said: "Decisions on tax are for the UK government to make."

Imports and exports of goods and services between Britain and the U.S. totalled $317 billion in 2023, the U.S. Bureau of Economic Analysis says, making Britain the fifth-biggest U.S. trade partner after Canada, Mexico, China and Germany.

The United States is Britain's single biggest national trade partner, although the UK trades far more with the 27 members of the European Union as a bloc.

Trump said earlier this month that he thought something could be "worked out" with Britain on the threat of tariffs while he sounded more committed to imposing tariffs on EU countries.

A trade war with the United States could undermine the plans of Starmer and Reeves to speed up Britain's slow economy which barely grew in the second half of last year.

Reeves is due to announce new economic and fiscal forecasts from Britain's independent budget watchdog on March 26, a key date for investors as she may have to explain how she will meet her fiscal rules that appear to be in danger of being broken.

Asked if she was worried about an adverse reaction in financial markets on March 26, Reeves said she would not give a running commentary on preparations.

"We took the action that was necessary in October to secure our public finances," she said. "Public services now need to live within the means that we've set."

U.S. Treasury Secretary Scott Bessent and finance ministers from China, India, Brazil and Japan all decided to skip this G20 meeting in Cape Town.

But Reeves said Britain wanted to play a full part in international forums.

Asked how host South Africa was likely to take Starmer's announcement on Tuesday of a 40% cut to Britain's aid budget to fund more defence spending, Reeves said Britain was focused on boosting economic ties between the two countries.

"The most important way to improve living standards in the UK and in South Africa is to improve trade between our countries," she said.