The UK is not part of the problem when it comes to US trade, says Britain’s finance minister

Britain is “not part of the problem” when it comes to the “persistent” trade deficit that President Donald Trump wants to address, the country’s finance minister told CNBC on Wednesday.

“I understand that President (Donald) Trump is concerned about countries that have large and persistent trade surpluses with the United States. That’s not the case for the UK,” UK Chancellor Rachel Reeves told CNBC’s Andrew Ross Sorkin.

“We are not part of the problem. So we, the UK, increased trade with President Trump last time he was in office,” she told CNBC on the sidelines of the World Economic Forum in Davos, Switzerland.

President Trump is irritated by the US trade deficit with many partners. but trade with Great Britain was generally more balancedswings between surpluses and deficits in recent years.

Latest UK trade data shows that in the second quarter of 2024, the UK had a trade surplus in goods with the US of £4.5 billion ($5.5 billion).

So while China, Mexico, Canada and the EU are seen as prime targets for Trump’s trade tariffs, Economists believe that the UK can get by relatively unscathed.

“There is absolutely no reason why our two great countries, with such a strong and special relationship, cannot increase these trade flows again,” Reeves commented.

The UK Chancellor of the Exchequer is in Davos this week trying to attract global investment into the British economy. The trip comes as Reeves has come under sustained pressure since unveiling the Treasury’s spending and taxation plans last fall.

A set of measures featured in “Autumn Budget” focused on increasing the tax burden on British businesses and sparked widespread criticism from industry leaders who said the move would stifle investment, jobs and growth.

Recent data releases, including growth is lower than expected data for November and higher than expected government borrowing costs in December also contributed to ongoing Treasury discomfort.

Britain found itself in hotter water at the start of the year as the interest rate demanded by investors to hold British bonds — known as gilts — rose sharply, reflecting market jitters about Britain’s economic outlook.

Reeves has stood firm on her fiscal plans and said growing the UK economy is her top priority.

The election of Donald Trump last November has been another headache for the centre-left Labor government, with a number of ministers such as Foreign Secretary David Lammy making less-than-flattering comments about Trump in the past.

Prime Minister Keir Starmer, Reeves and the British establishment, unnatural bedfellows when it comes to political ideology, are keen to warm to the White House, especially amid the potential threat of universal trade tariffs.

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