Rachel Reeves will fly to Washington next week to meet her American counterpart for the first time, as the British government looks to intensify negotiations over a UK-US trade deal.
The chancellor will be in the US from Tuesday to Friday for the spring meetings of the International Monetary Fund. At the heart of her visit, though, will be talks with the US treasury secretary, Scott Bessent, whom British officials regard as one of their most likely allies in negotiating a deal.
With Donald Trump talking about coming to the UK for a state visit in September, officials are increasingly hopeful they can agree tariff reductions in the coming months or even weeks.
The US president and Keir Starmer spoke to each other by phone on Friday afternoon, with trade top of the agenda. It was the first time the two leaders had spoken since Trump made his tariff announcement.
Downing Street said they discussed “the ongoing and productive discussions between the UK and US on trade”. A spokesperson said: “The prime minister reiterated his commitment to free and open trade and the importance of protecting the national interest.” One source said the call lasted 35 minutes.
A senior government source had said earlier that Reeves would “make the argument for a trade relationship that is deeper and more open that the one on the table at the moment”.
The chancellor said earlier this week that “active negotiations” were ongoing. “Any deal that’s able to be secured will always have front and centre British national interest,” she said.
Ministers have put a trade deal at the top of their list of priorities for US-UK relations. The Office for Budget Responsibility has said a full-blown global trade war could wipe 1% off gross domestic product in 2026-27.
UK officials are pessimistic about their chances of persuading Trump to give them an exemption from his 10% global tariff, but they hope to be able to agree reductions to the 25% rates being promised on certain items.
British officials have presented a draft deal to their US counterparts that includes reductions to tariffs on steel, aluminium and cars. Sources say it does not cover pharmaceuticals, however. Trump has said he will announce tariffs for the sector “very shortly” that could cost British drug companies billions of pounds in revenue.
Pharmaceuticals are the UK’s second-biggest export to the US at about £7bn, after cars which account for about £8bn.
In return, the UK has offered to reduce the headline rate of its digital services tax, which is currently paid by a small number of US technology companies.
Sources said the proposed agreement was relatively narrow in nature but that a broader trade deal could be still be worked on afterwards. A more wide-ranging trade agreement would face political difficulties, however, such as UK resistance to importing chlorinated chicken and other meat, and the US desire to sell goods and services to the NHS.
Trump and his key officials have given positive signals in recent days about the chance of getting a deal signed soon. Some reportssuggest US officials hope to have it completed in as soon as three weeks’ time.
Trump’s press secretary, Karoline Leavitt, said on Wednesday that the US would be announcing its first deals “very soon”, and the vice-president, JD Vance, said on Thursday: “There’s a good chance that, yes, we’ll come to a great agreement that’s in the best interest of both countries.”
Trump said on Thursday night that he was expecting to travel to the UK in September for a second state visit, calling the prospect “beautiful”.
One British official said: “They have the outline agreement, we presented it to them before the tariff announcement. The ball is in their court. The only question is: do they want to do a deal or not?”
Reeves’ meeting with Bessent, who is not one of the tariff hardliners in the Trump administration, will cover the trade deal as well as wider questions about the global economy.
A government source said Reeves would not be negotiating directly with Bessent but would present an argument “making clear our overarching view on free trade”, underlining the UK’s key priorities of steel, cars and pharmaceuticals.
Bessent has prioritised the UK along with countries such as Japan, Australia, South Korea and India in the 90-day pause on higher tariffs, but ge told Yahoo Finance this week that not all trade deals were likely to be completed within the window.
During her US trip, Reeves will also take part in a panel hosted by the IMF in which she will argue for more free and open trade and reform of international financial institutions to take account of the new global economic realities.
The source said Reeves would say that countries and institutions must recognise that change has happened, and that bodies such as the IMF, the World Trade Organization and the World Bank need to adapt.
The chancellor will also meet business leaders as she hopes to drum up investment opportunities for the UK, pitching it as a safe haven in a tumultuous economic world. She will have discussions with finance leaders from Europe and India as Britain tries to improve its trading relationships with partners outside the US.
Source: theguardian.com
