Business reporter
The UK’s trade relationship with the EU is arguably “more important” than the one it has with the US, the chancellor has told the BBC.
Rachel Reeves suggested that moving closer to the EU on trade was a bigger priority, despite her current focus on talks with the US.
Ahead of her meeting with US Treasury Secretary Scott Bessent on Friday, Reeves said the government was working “flat out” to secure a trade deal with the US.
Earlier this week, she signalled the UK could lower tariffs on US car imports from their current 10% to 2.5% as part of a wider deal.
The UK is preparing for a summit with the EU in May in an attempt to “reset” the relationship between the two.
“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 told the BBC.
“Obviously I’ve been meeting Scott Bessent this week whilst I’m in Washington, but I’ve also this week met the French, the German, the Spanish, the Polish, the Swedish, 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.”
A Downing Street spokesman said the chancellor’s remarks had been “a statement of fact that the EU is our largest trading partner”.
The spokesman also highlighted comments that Sir Keir Starmer has made previously where he had said it was a “false choice between the EU and the US”.
Regarding the situation with the US, the chancellor said she “understands what President [Donald] Trump wants to address” with his tariffs, ahead of talks with her US counterpart in Washington.
Reeves said there were similarities with the way both the US and UK governments had come to power off the back of voter frustration with the economy.
Reuters“We’re all grappling with this issue of tariffs but I think that there is an understanding why President Trump wants to address some of the global imbalances there are in the system,” she said.
Trump has already imposed tariffs of 25% on all car imports to the US including from the UK.
The UK also faces a broader tariff rate of 10% and is looking to negotiate an agreement with the US administration, along with dozens of other countries hit with even higher levies – most of which are currently on pause until July.
Some US officials have been positive about the prospects of a deal. Last week US Vice-President JD Vance said there was a “good chance” a trade deal could be reached with the UK.
Reeves said she had also been working closely with European and Canadian counterparts to remove trade barriers, and that conversations around the table at G20 meetings this week had been difficult.
“Obviously there are strains. We are all following what’s happening in our domestic bond markets, in our equity markets, and we all know that that uncertainty is bad for investment in the UK economy.”
You can watch Faisal’s full interview with Rachel Reeves here.
