British Chancellor Rachel Reeves stated that trade with the European Union remains “even more important” than economic ties with the United States.
The comments came merely hours before her meeting with U.S. Treasury Secretary Scott Bessent in Washington as Britain seeks to negotiate protection from Donald Trump’s newly imposed tariffs.
“I understand why there’s so much focus on our trading relationship with the U.S. but actually our trading relationship with Europe is arguably even more important, because they’re our nearest neighbours and trading partners,” Reeves told the BBC.
Her comments prompted a swift reaction from Downing Street, which refused to endorse the Chancellor’s assessment.
The Prime Minister's spokesman described her words as "a statement of fact that the EU is our largest trading partner" but added that both economic bonds hold "enormous value" to Britain.
Brussels Talks Gain Focus Amid U.S. Duties
The Chancellor’s remarks spotlight the Labour government’s pledge for closer EU cooperation after years of Brexit friction.
While Reeves pursues a U.S. trade deal, her government has devoted considerable resources to preparing for next month’s UK-EU summit, scheduled for 19 May.
A leaked draft document outlines plans for a “strategic partnership” between London and Brussels based on “maintaining global economic stability and our mutual commitment to free and open trade.”
The draft also reportedly mentions climate goals by referring to “keeping the Paris Agreement goal of limiting global temperature rise to 1.5C within reach.”
Reeves noted that her Washington trip included meetings with European finance ministers.
"I've also this week met the French, German, Spanish, Polish, Swedish, Finnish finance ministers—because it is so important that we rebuild those trading connections with our nearest neighbours in Europe."
Conservative Outcry Targets Chancellor’s Stance
The timing of Reeves’s comments about EU trade priority generated criticism from opposition Conservatives.
Shadow Business Secretary Andrew Griffith dubbed it “a major gaffe by this foot-in-mouth Chancellor” to make such statements while seeking a US trade agreement.
"The U.S. is our single largest trading partner and the one where exporters such as British car makers are experiencing acute flux right now," Griffith said.
Griffith added that Reeves was "out of her depth and making poor decisions which could cost the UK dear."
Griffith later told Sky News that his party would “absolutely be seeking to prioritise” a U.S. deal over the EU.
The UK already enjoys tariff-free trade on goods with Europe, making the U.S. “the next best choice if you want to grow the economy after the chancellor’s crashed it,” he argued.
Money Markets See Sterling Drop
The Chancellor’s remarks about prioritising EU trade resulted in the pound dipping 0.2 percent against the dollar, falling to $1.331.
This happened despite retail sales data exceeding expectations.
The fiscal data offers a more mixed view than Reeves suggested.
Britain's trade with the U.S. grew ten times faster than with the EU last year, according to the Office for National Statistics.
Over the past decade, UK-U.S. trade has more than doubled, while trade with the EU has risen at half that rate.
Working through Trump’s Duty Demands
When Trump unveiled his “Liberation Day” tariffs earlier this month, he applied a 10 percent levy on UK exports to the U.S., along with 25 percent charges on cars, steel, and aluminium.
Reeves conveyed some sympathy for Trump's position on tariffs.
"We're all grappling with this issue of tariffs but I think that there is an understanding why President Trump wants to address some of the global imbalances there are in the system," she told the BBC.
The UK aims to offer “political and financial, including fiscal, stability” to secure a trade deal with Washington.
UK Concessions on U.S. Car Exports & VAT
Earlier this week, Reeves hinted Britain could lower tariffs on U.S. car imports from their current 10 percent to 2.5 percent as part of a wider agreement.
Following her meeting with U.S. Treasury Secretary Bessent, Reeves wrote that discussions had focused on "reaching an agreement that is in both our national interests."
British officials stated that the UK was confident a “negotiating space” for a deal was in sight, potentially lowering tariffs on goods from cars to seafood products.
However, Trump mentioned in a Time interview that Britain’s VAT system remains a sticking point for trade negotiations.
The U.S. views the UK’s 20 percent VAT as a tariff because it applies to imports while foreign exporters receive VAT refunds.
Lib Dems Question Labour’s Trade Focus
Joining the discussion, Liberal Democrat deputy leader Daisy Cooper said Reeves was “absolutely right that our trading relationship with Europe is more important, but the government’s approach so far shows these are little more than empty words.”
Cooper claimed the Labour government had "bent over backwards to appease Donald Trump but barely lifted a finger to unleash growth by boosting trade with Europe."
She urged the government to “get serious about our trading relationship with Europe by ripping up the red tape from the botched Brexit deal, agreeing a capped youth mobility scheme and negotiating a UK-EU customs union.”
Starmer Sticks to Transatlantic Equation
While Reeves favoured EU connections in her comments, Downing Street affirmed that "The Government rejects the premise that it must choose between our European and American allies."
Prime Minister Sir Keir Starmer has repeatedly dismissed claims that Britain needs to choose between partnerships with Europe or America, insisting that the national interest “demands that we work with both.”
This twin-track policy meets its first major examination with next month’s UK-EU summit. The meeting occurs as Trump’s protectionist measures and Britain’s post-Brexit aspirations necessitate forming sturdy commerce links with both economic giants.
According to reports, the UK plans to table a sanitary and phytosanitary deal to eliminate checks on exports to the EU and reach an agreement on carbon emissions.
The outcome of these talks will determine the bandwidth London has to balance its priorities, both sides of the pond.
Keep up with Daily Euro Times for more updates!
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