Reeves holds ‘positive and upbeat’ trade talks with Bessent
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Version 7 of 8. Chancellor discusses ‘prosperity deal’ with Treasury secretary Scott Bessent but US calls for reduced tariffs on car imports to UK Rachel Reeves discussed what she called a “prosperity deal” with the US treasury secretary, Scott Bessent, in a meeting her team claimed was “upbeat and positive” on Friday. “Today I met with Scott Bessent to discuss the UK-US economic prosperity deal and our goal of reaching an agreement that is in both our national interests,” Reeves said, after meeting the treasury secretary. The UK has been negotiating hard in the hope of securing exemptions from some of Donald Trump’s harshest tariffs, including the 25% levy on car imports, but Reeves left Washington without being able to claim any tangible progress. The US has made fresh demands in recent days, including calling for tariffs on car imports to the UK to be cut; and the chancellor was forced to concede earlier in the week that she was “not going to rush a deal”. UK Treasury sources said trade negotiators from the two countries would continue to work hard on a deal. Bessent is regarded by UK officials as one of the more moderate forces inside the Trump administration – but it is unclear how much he can influence trade policy. Before meeting him, the chancellor suggested that the UK’s trading relationship with the EU is “arguably even more important” than that with the US. “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. As well as Bessent, Reeves said she had held discussions with her counterparts from a string of European countries at this week’s International Monetary Fund meetings. “I’ve also this week met the French, the Germans, the Spanish, the Polish, the Swedish [and] 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,” she said. The UK and EU are holding a summit aimed at resetting the relationship between the two sides next month, with Labour preparing to accept some form of youth mobility scheme in order to strike a deal that could lower trade barriers. The IMF managing director warmly welcomed the rapprochement between the UK and the EU at a panel event on Thursday, describing the two sides as divorcees that are now dating. Downing Street said Reeves’s remarks had merely been a statement of fact, and were not aimed at minimising the weight the UK places on ties with the US. “The EU is our largest trading partner,” No 10 said. “It is factually a matter of public record. Both have incredible importance to us. And we treat both with enormous respect.” As UK negotiators battle to secure an exemption from Donald Trump’s 25% tariff on cars, which British carmakers have warned could lead to job losses “within weeks”, Reeves has signalled a willingness to cut the UK’s tariffs on car imports, now set at 10%, in return. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion Addressing US investors at a reception at the British ambassador’s residence in Washington on Thursday evening, Reeves said she shared some of the White House’s concerns about longstanding trade deficits. Drawing parallels between the frustrations that drove British voters to back Keir Starmer last July and those of Trump’s supporters, she said: “In this country, but also back home in my country last year, people voted for change. “They voted for change because they didn’t think that the economy worked well enough for them and their families. They saw the erosion of good jobs that paid a decent wage. They saw industries that once powered their towns disappear. And as elected politicians we have to respond to that.” Britain’s high-end carmakers such as Aston Martin, Bentley, Rolls-Royce and McLaren are particularly affected by the 25% tariffs because a large proportion of their customers are in the US. Bentley has previously said it would pass on tariff costs to buyers, a move that would probably hit demand. However, the industry is wary of the UK government offering very low tariffs on US exports as inducement to a broader deal. Any cuts to tariffs on US goods imported into the UK would have to be offered to every country in the world, unless they are part of a formal free-trade agreement, according to World Trade Organization rules. That means a cut in tariffs on US exports below the existing 10% would make it easier for Chinese carmakers to sell in Britain. Amid the tariff turmoil, the leaders of the Society of Motor Manufacturers and Traders, a UK automotive lobby group, travelled this month to Washington, meeting industry counterparts and Britain’s ambassador to the US, Peter Mandelson. |