LONDON — Britain’s economy will be hit by President Donald Trump’s trade war with its allies even if the U.K. strikes a trade deal with the White House, Chancellor Rachel Reeves said Tuesday.
“It’s absolutely the case that even if tariffs aren’t applied to the U.K. we will be affected by slowing global trade, by slower GDP growth and by higher inflation than otherwise would be the case,” Reeves told hundreds of top British manufacturers at a key industry conference.
Her comments follow the Trump administration’s decision Monday night to impose a flat 25 percent tariff on goods from Mexico and Canada, while also increasing duties on Chinese goods from 10 to 20 percent.
“We don’t want to see tariffs,” Reeves told delegates from across Britain’s manufacturing sector at industry body MakeUK’s National Manufacturing Conference in central London. There’s “every reason to be hopeful” about a U.K.-U.S. trade deal, she added.
Following Prime Minister Keir Starmer’s meetings with Trump at the White House last week, Reeves said Britain is “searching now for some sort of trade deal” with the U.S. to allow it to dodge the direct threat of Trump’s tariffs.
Trump told reporters the two sides “could very well end up with a real trade deal where the tariffs wouldn’t be necessary.”
Duties on U.K. exports of steel and aluminum, nevertheless, are due next week with reciprocal tariffs on British goods expected in April.
Ahead of his meeting with Trump, Starmer also committed to boost defense spending to 2.5 percent of U.K. GDP by 2027 as a sweetener.
Reeves said she wants to “make sure that, as we spend more on the defense, that is used to support British jobs and British industries.”
She told the manufacturing firms the government plans to cut red tape on defense procurement, including reviewing single-source contract rules.
“Strong security is the bedrock of a strong economy,” she said.
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