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Rachel Reeves, the UK Chancellor, has tempered expectations for a swift resolution in ongoing trade discussions with the Trump administration, indicating that the UK will not be hurried into a deal.
During her initial in-person meeting with US Treasury Secretary Scott Bessent, where she aimed to persuade him to consider tariff reductions, Reeves emphasized the necessity for patience in negotiations. “The focus is on achieving an agreement that serves our national interests rather than rushing into anything,” she remarked.
When asked about her agenda with Bessent, Reeves clarified that their conversation would primarily revolve around enhancing the existing trade ties, rather than delving into the specificities of automotive and agricultural standards.
The UK has already made some concessions in an effort to persuade the US to lessen tariffs, including a reduction in the digital services tax imposed on American tech firms. Reeves’ visit to Washington coincided with the spring meetings of the IMF, during which she aimed to negotiate an exemption from the 25% tariffs currently affecting cars, aluminum, and steel.
Leaders in the British automotive industry have raised alarms about impending job losses within the premium sector unless the government secures a deal that protects major brands like Jaguar Land Rover and Rolls-Royce from tariffs.
The potential for tariff exemptions, specifically from the 10% base tariff imposed on all imports by Trump, remains unclear.
Challenges to promising an early agreement surfaced this week following a leaked document outlining new US demands, which appeared in the Wall Street Journal. UK officials expressed concern over the US insistence on concessions across several new areas, including adjustments to UK agricultural standards like those governing beef imports.
Historically, the UK has resisted US calls to allow hormone-treated beef into its market, viewing the relaxing of agricultural standards as a non-negotiable issue, particularly significant for Labour, as it would jeopardize chances for a veterinary agreement with the EU.
Reeves firmly dismissed any notion that food standards could be compromised. “Maintaining our food standards is essential, and we have communicated this clearly to the US, which they understand,” she asserted.
While she did not dismiss the mention in the leaked document regarding lowering import tariffs on US cars from 10% to 2.5%, Reeves maintained her stance on free trade without delving into specific figures. “I’m committed to free trade, but specifics won’t be discussed at this time,” she said.
Later, during an event aimed at global investors, she suggested that the UK might consider reducing tariffs on certain US products to appease Washington. “Despite existing tariffs on both sides, I believe we should work towards lowering these barriers,” she stated.
Reeves’ cautious comments stood in stark contrast to recent government statements, which implied that much of the agreement had been virtually settled.
In response to the urgent concerns of UK car manufacturers, she acknowledged the gravity of the tariff-related challenges and reiterated the government’s dedication to securing a beneficial deal. “It’s crucial to prioritize our national interests over any rushed agreements,” she emphasized.
Amidst these discussions, the leak of US demands has raised alarms among British officials, highlighting that the complexity of finalizing a deal may be greater than anticipated, despite optimistic comments from Trump’s vice president, JD Vance, about a potential agreement.
It is notable that a draft deal had already been presented to US representatives before Trump announced his tariffs, but recent news asserts that this agreement does not encompass the pharmaceutical industry, suggesting a need for further renegotiation if tariffs extend to that sector as well.
A source from Whitehall remarked, “Our assumptions about the deal have had to shift multiple times during this process, and further adjustments are likely.”
Andrew Bailey, the Governor of the Bank of England, voiced concerns in Washington regarding the risks posed to UK economic growth by disruptions in global trade. “Given the openness of the UK economy, we must account for international growth impacts when assessing our economic models,” he stated.
Recent figures from the Office for National Statistics painted a concerning picture of the government’s fiscal health, revealing that borrowing for the financial year was £151.9 billion—up by more than £20 billion from the previous year.
In light of these economic challenges, Reeves reinforced her commitment to maintaining stringent fiscal rules when asked about speculation regarding potential tax increases in her upcoming autumn budget. “The latest numbers emphasize our prioritization of managing public finances,” she affirmed.
To adhere to her fiscal policies, she had previously announced reductions in welfare and future Whitehall budgets during her spring statement.
As she readied to meet with other economic leaders in Washington, markets observed an uptick following Trump’s remarks hinting at a possible easing of tariffs on China. The president suggested that while tariffs might decrease substantially, they would not be eliminated entirely. Currently, China is subject to 145% tariffs, with retaliatory measures from Beijing in place.
The IMF’s spring meetings, which commenced on Tuesday, delivered a sobering warning regarding the adverse effects of the ongoing trade war, predicting a significant negative impact on the global economy.
Source
www.theguardian.com