UK Finance Minister Rachel Reeves is visiting Washington, warning that the trade wars of the former president could have a "severe impact" on the British economy, as she grapples with a downgraded domestic growth forecast.
The Chancellor of the Exchequer is scheduled to attend the spring meetings of the International Monetary Fund (IMF) and the World Bank and will have her first face-to-face meetings with G7 finance ministers, including US Treasury Secretary Scott Bessent.
In a statement released on Tuesday night ahead of her three-day visit, Reeves said: "The world has changed, and we have entered a new era of global trade. There is no doubt that the imposition of tariffs will have a serious impact on the global and domestic economies."
The IMF earlier on Tuesday downgraded its growth forecast for the UK by 0.5 percentage points for 2025. The revised figures place the UK's GDP growth above Japan, France, Italy, and Germany and the Euro area, and below the US and Canada.
However, the forecast was completed after the former president's Memorial Day announcement but before tariffs were reduced to 10% for most countries.
During meetings with G20 and European finance ministers on Wednesday and a speech at the global economic summit, "the Chancellor will emphasize the importance of addressing trade barriers to promote economic growth," the UK government announced.
Reeves said: "I will continue to champion open trade that provides stability for businesses and security for working people." She added, "We need a global economy that provides stability and fairness for businesses wanting to invest and trade."
'Protecting National Interests'
Later this week, Reeves is scheduled to meet directly with US Treasury Secretary Scott Bessent to push for an exemption for the UK from US tariffs.
The UK government is prioritizing negotiations to reduce the 25% tariffs on cars, steel, and aluminum imposed by the previous administration, as well as impending tariffs on pharmaceuticals.
To secure a deal, the UK has offered a review of its digital services tax and a reconsideration of the implementation of online safety and digital competition rules.
In London, there is also likely to be some movement in the agricultural sector, including lowering tariffs on imports of high-end US beef, chicken, and pork, although food standards remain a key sticking point.
UK Prime Minister Keir Starmer reiterated the "importance of protecting national interests" in any agreement during a call with the former president over the weekend.
Reeves also pledged to "champion Britain’s national interest" in her meetings. Officials do not expect a breakthrough this week.
Impact of the former president's trade policies on the UK economy
The former president's trade policies could affect the UK economy through various channels:
Tariffs: High tariffs imposed by the US on UK goods would weaken the competitiveness of British exporters, leading to a decrease in exports to the US and negatively impacting UK economic growth. Tariffs on key industries such as automobiles, steel, and aluminum could particularly lead to reduced production and job losses in these sectors.
Global Trade Tensions: The former president's trade policies could escalate trade tensions between the US and major economies such as China and the European Union, increasing uncertainty in the global trade environment. This could dampen investment and export activities of UK companies and negatively affect UK economic growth.
Exchange Rate Fluctuations: The former president's trade policies could cause fluctuations in the value of the US dollar, which could also affect the value of the British pound. Exchange rate volatility could impact the prices of UK imports and exports, adding uncertainty to the UK economy.
Trade Negotiations with the US: The UK is pursuing a free trade agreement (FTA) with the US, but the former president's protectionist trade policies could put the UK at a disadvantage in the negotiation process. Particularly in the agricultural sector, the UK may have to ease its food standards in line with US demands, which could raise concerns among British consumers.
Reeves' visit to Washington presents a crucial opportunity for the UK to minimize potential economic damage from the former president's trade policies and maintain a stable trade relationship with the United States.
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