Rachel Reeves is walking a tricky line in Washington DC as she attempts to negotiate a trade deal with the US this week. She will have to balance the political pressure to deliver good news on a deal and protect Britain’s interests, while at the same time being sure not to even appear confrontational or oppositional to a hyper-sensitive Trump.
Her first face-to-face meetings with Scott Bessent, the US treasury secretary, will be key to whether she comes back home with anything solid to show for her time in the US. Her conversations with him will hopefully lay the foundations of any future trade deal the UK will be able to strike, with Reeves saying they would be talking about “how we can build on the trade relationship that we have”.
How good are Reeves’s prospects?
According to Richard, the chancellor arrived in Washington in a relatively good position.
Back at home, her Labour government has been dealing with almost universally bad news on the economic front and has so far failed to deliver the growth that they promised, but in the US he believes she has the space to negotiate a favourable deal.
“There is £60bn worth of bilateral trade between our two countries and this is significant,” he points out. Yet he also says a big challenge for Reeves will be getting the deal prioritised amid the clamour this week. Trump’s focus is also likely to be on China, with whom he has the biggest grievances, but where he is also softening his position to open up space.
“Reeves has flown into Washington with every other finance minister, each one of them trying to cut a deal with the Trump administration,” he says. “There is a queue around the block to get time with the US.”
Yesterday Reeves also seemed very keen to manage – or even dampen – expectations, dashing hopes of an early breakthrough during this week’s negotiations, saying although she is confident a deal can be struck she is “not going to rush” into anything.
What does she want?
Reeves’s ultimate wish would be to fly home with a blanket exemption from the 10% trade tariffs Trump has imposed on the UK, and with an agreed trade deal under her belt. But, again, she has indicated that this is almost certain not to happen.
The UK has already offered concessions in the hope of getting tariffs cut, such as offering to reduce the digital services tax on US tech companies. One of her reported aims this week is to secure a carve-out tariff reductions for the 25% levies placed on cars, aluminium and steel to try and stave off the job losses that UK car industry bosses have warned could be just weeks away.
However, as economics editor Heather Stewart reported last night, Reeves has already pushed back on leaked plans that suggested that the US was preparing to issue a series of demands, including the government drop its standards on agricultural products such as hormone-fed beef.
Reeves needs to hold her position in the coming days on deal-breakers for the voting public like the prospect of being forced to import chlorinated chicken or give away parts of the NHS. She also needs to make sure that she isn’t alienating or cutting off the UK’s relationships with other trading partners, like the European Union.
“I think a good scenario for her would be some kind of positive public commitment on both sides about an intention to strike a deal and deepen economic links,” says Richard. “Something she can hold up and say, ‘look what I got done’.
What are her main challenges to getting what she wants?
A problem Reeves shares with all the other finance ministers trying to secure agreements with the US this week is – you guessed it – that they are trying to negotiate with a wildly erratic and unpredictable partner.
“The whole process has this sense of peril and brinkmanship,” says Richard. As a reporter, Richard says he finds reporting on Trump’s economic policies “just completely mad. I wake up in the mornings and check the news on tariffs like I’m checking the weather because it’s so changeable. It is hard to be authoritative on something that is constantly shifting so imagine what it’s like to be trying to nail down the details of a trade deal.”
One thing Reeves will be aware of is that even if she does manage to carve out some concessions or reprieves from the blanket 10% tariff Trump has imposed on all trading partners, the chilling economic effect of his policies so far is almost inevitably going to be felt by both businesses and consumers in the UK and beyond for months or years to come.
One problem Labour has, says Richard, is that the government’s gloomy and downbeat rhetoric on the economy since the party came to power last year has already affected business and consumer confidence.
“People here responded to that already – they didn’t start that business or make that hire or buy that new kitchen,” he says. Now with the tariffs and global economy sliding, Reeves is potentially facing the prospect of having to raise taxes, cut spending or break her own fiscal promises in the Autumn budget,”which will increase the pressure on her to come home with good news” says Richard.
