UK ‘not part of the problem’ when it comes to trade with US, says UK finance minister

The United Kingdom is “not part of the problem” when it comes to “persistent” trade deficits 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 is not the case with the United Kingdom,” UK Chancellor Rachel Reeves told Andrew CNBC’s Ross Sorkin.

“We are not part of the problem here. “So we, the United Kingdom, increased trade with President Trump the last time he was in office,” he said, speaking to CNBC on the sidelines of the World Economic Forum in Davos, Switzerland.

President Trump is flatly irritated by America’s trade deficits with many of its partners, but trade with the United Kingdom has generally been more balancedoscillating between surplus and deficit in recent years.

The latest UK trade data shows that, in the second quarter of 2024, the United Kingdom had a trade surplus of £4.5 billion ($5.5 billion) with the United States in goods.

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

The package of measures presented in the ‘Autumn Budget’ The move focused on increasing the tax burden on British businesses and has drawn widespread criticism from industry leaders, who said the move would stifle investment, jobs and growth.

Recent data releases, including lower than expected growth November data and Higher than expected government borrowing costs. in December, have also contributed to persistent unrest at the Treasury.

The UK found itself in further trouble earlier in the year, when the interest rate that investors demanded to hold UK bonds – known as gilts – rose sharply, reflecting market nervousness about the UK’s economic prospects.

Reeves has stuck firmly to his tax plans and said growing the UK economy is his top priority.

The election of Donald Trump last November represented another headache for the centre-left Labor government, with several ministers, including Foreign Secretary David Lammy, making unflattering comments about Trump in the past.

Unnatural partners when it comes to political ideology, Prime Minister Keir Starmer, Reeves and the British establishment are looking to build good relations with the White House, particularly amid the potential threat of universal trade tariffs.

While China, Mexico, Canada and the EU are seen as the main targets of Trump’s trade tariffs, Economists believe the UK could emerge relatively unscathed.

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