Chancellor of the Exchequer Rachel Reeves has said that rebuilding the United Kingdom’s trading relationship with the European Union is “arguably even more important” than securing a new deal with the US.
She has also warned of ongoing risks posed by tariffs under the US administration.
Focus on trade with the EU
Speaking to the BBC during her visit to Washington, Reeves said, "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."
Her comments come as the country prepares for a summit with the EU in May aimed at “resetting” the bilateral relationship.
Reeves also held meetings this week with finance ministers from France, Germany, Spain, Poland, Sweden and Finland, signalling a strong diplomatic push to strengthen ties with European neighbours.
Nevertheless, Reeves confirmed that the government is “working flat out” to secure a trade agreement with the US.
The Chancellor met US Treasury Secretary Scott Bessent on Friday, tweeting that both nations sought a deal "in both our national interests."
She has suggested that the UK could lower its tariffs on US car imports from 10% to 2.5% as part of the negotiations.
The UK faces some trade hurdles in its dealings with Donald Trump’s US, with the latter imposing a 25% tariff on car imports, alongside a broader 10% tariff on goods.
Many of these measures are currently paused until July, but the uncertainty certainly isn’t likewise on hold.
Trump-driven uncertainty
"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," Reeves said.
She noted that economic challenges shared by both nations, including market uncertainty, had complicated discussions at this week’s G20 meetings.
Conservative shadow business secretary Andrew Griffith criticised the government’s strategy, arguing the next priority should be a US deal, while Liberal Democrat Treasury spokesperson Daisy Cooper accused the government of favouring the US relationship at the expense of opportunities in Europe.
Downing Street later clarified that Reeves’ remarks reflected the “fact that the EU is our largest trading partner” and reiterated that it was “a false choice” between the two markets.