Photo credit: www.theguardian.com
Rachel Reeves is set to travel to Washington next week for her inaugural meeting with her American counterpart as the UK intensifies efforts to negotiate a trade agreement with the United States.
The Chancellor will be in the US from Tuesday to Friday, participating in the spring meetings of the International Monetary Fund (IMF). Central to her trip will be discussions with US Treasury Secretary Scott Bessent, identified by British officials as a key ally in advancing trade talks.
Amid talks of a potential September state visit to the UK by Donald Trump, officials are expressing optimism about reaching an agreement on tariff reductions in the near future.
President Trump and UK Labour leader Keir Starmer had a telephone conversation on Friday, with trade dynamics as a focal point. This marked their first dialogue since Trump’s recent tariff announcement.
According to Downing Street, the leaders discussed the ongoing discussions on trade, with a spokesperson affirming the Prime Minister’s commitment to free trade while emphasizing the necessity of safeguarding national interests. Reports indicate that their conversation lasted for 35 minutes.
A senior government official noted that Reeves intended to advocate for a more expansive trade relationship than what is currently proposed.
Earlier in the week, Reeves confirmed that active negotiations were underway, reiterating that any deal would prioritize British national interests.
Trade remains a crucial priority for the UK government within the context of US-UK relations. The Office for Budget Responsibility has warned that a significant global trade conflict could result in a 1% decline in GDP by 2026-27.
While UK officials harbor doubts about securing an exemption from Trump’s 10% global tariff, they are hopeful for a concession on the 25% tariffs on select goods.
UK representatives have submitted a preliminary trade proposal to the US, which includes tariff reductions on steel, aluminum, and vehicles. However, it’s noted that pharmaceuticals are not included in this draft. Trump has signaled that he will soon announce tariffs impacting the pharmaceutical sector, which could financially burden UK drug manufacturers significantly.
Pharmaceutical exports from the UK to the US, valued at approximately £7 billion, are second only to car exports, which total around £8 billion.
In exchange, the UK is reportedly willing to lower its digital services tax, which presently affects a limited number of US tech companies.
Although the initial agreement is considered narrow, sources suggest that subsequent broader trade discussions could follow. However, potential political hurdles remain, including UK resistance to importing chlorinated chicken and the US’s appetite for accessing the UK’s National Health Service procurement.
Recently, both Trump and senior administration officials have given encouraging signals regarding a quick trade agreement. Some reports indicate that US officials aspire to finalize a deal within the next three weeks.
In a recent statement, Trump pointed out his anticipation of a second state visit to the UK in September, expressing enthusiasm over the possibilities of this trip.
A British official highlighted that an outline agreement has already been shared with US officials prior to the tariff announcement, emphasizing that the decision now rests with them regarding the pursuit of a deal.
Reeves’ upcoming meeting with Bessent, who is not aligned with the administration’s hardline tariff stance, will touch on both the trade agreement and broader global economic issues.
A government source noted that while Reeves would not engage in direct negotiations, she would articulate the UK’s stance on free trade, focusing on priorities related to steel, automotive, and pharmaceuticals.
Bessent has placed a premium on maintaining good trade relations with the UK along with other nations like Japan, Australia, South Korea, and India, during a temporary suspension of heightened tariffs. However, he cautioned that not all trade agreements would be finalized within this timeframe.
During her visit, Reeves is also scheduled to participate in an IMF panel where she will advocate for more liberal trade policies and the reform of international financial institutions to address emerging global economic realities.
Sources indicate that Reeves intends to underscore the need for countries and institutions to adapt to ongoing changes, particularly within frameworks like the IMF, the World Trade Organization, and the World Bank.
Additionally, she will engage with business leaders in the US to promote investment opportunities in the UK, positioning it as a stable option amidst a fluctuating economic landscape. This trip will also see her converse with financial leaders from Europe and India, aiming to strengthen Britain’s trade relationships beyond the US.
Source
www.theguardian.com