Rachel Reeves will use a trip to Washington DC to “stand up for Britain’s national interest”, as the UK chancellor looks to pave the way for a UK-US trade deal.
During spring meetings of the International Monetary Fund (IMF) and World Bank Group, Reeves will meet with fellow G20 and G7 allies and is expected to make the case for free and open trade.
The meetings began on Monday (21 April) and are slated to last until Saturday (26 April).
‘Changing world’
Ahead of the trip, Reeves said:
“The world has changed, and we are in a new era of global trade. I am in no doubt that the imposition of tariffs will have a profound impact on the global economy and the economy at home.
“This changing world is unsettling for families who are worried about the cost of living and businesses concerned about what tariffs will mean for them. But our task as a government is not to be knocked off course or to take rash action which risks undermining people's security.”
IMF managing director, Kristalina Georgieva, was also among the world figures warning of the impact of US president Donald Trump’s tariffs last week.
Georgieva said that the IMF’s updated economic predictions showed increases in inflation forecasts and slowdowns in growth.
Trade deal?
Reeves will also meet US treasury secretary, Scott Bessent, in-person for the first time and is expected to push for a US-UK trade deal. The agreement is being touted as a way to take the sting out of US tariffs on the UK.
Trump hit UK exports to the US with a ‘baseline’ 10% tariff rate earlier this month, with higher 25% levels already applied to automotive and steel.
Downing Street said “productive” talks on trade occurred between prime minister Sir Keir Starmer and Trump last week (18 April).
‘Good chance’
Earlier this month, the UK secured its eighth deal with an individual US state when Illinois signed a memorandum of understanding. Originally, the state-level programmes were meant as a way of paving the way to a wider federal deal.
Vice-president JD Vance last week said there was a “good chance” of a US-UK trade deal, while White House officials told the Telegraph that they believed that an agreement would be finalised “within three weeks”.
Inflation and disruption
CEO of UK Export Finance, Tim Reid, said that it was easier to prepare for the fallout of the Covid-19 pandemic than with Trump’s erratic trade policy.
“There was an immediate disruption to business models. That was very clear during Covid … there is still a lot of uncertainty right now in terms of the impact of this changing world,” Reid, a former banker at HSBC, told the Guardian.
He added that it was difficult to estimate the extent of the impact on UK firms due to the constantly changing nature of the tariffs.
Volatility
Megan Greene, one of the Bank of England’s policymakers, warned that a lot more volatility was likely to come as a result of the US trade policy, while also saying that a diversion of Asian exports into the UK could actually drop prices.
“I think the tariffs actually represent more of a disinflationary risk than an inflationary risk”, Greene told Bloomberg TV.
