We will fight Trump’s plans to impose tariffs on the UK – Rachel Reeves | Rachel Reeves

Chancellor Rachel Reeves will use a keynote speech this week to promote free and open trade between nations as a cornerstone of Britain’s economic policy and put the Labor government on a direct confrontation course with President-elect Donald Trump.

Reeves will use her first speech at the Mansion House – an annual showpiece for the chancellor – to outline a post-Budget plan for “growth”. But as the British government seeks to respond to Trump’s stunning victory and the challenges it poses for Britain on key economic and foreign policy issues, the Chancellor is expected to make clear that she will take the fight to defend free trade to Washington.

The issue is quickly becoming a major test for relations between the incoming Trump presidency and London, along with their very different approaches to continued support for Ukraine’s war against Russia. On Friday, Trump – who has promised to impose steep tariffs on all imports into the US – wasted no time in asking arch-protectionist Robert Lighthizer to return as US trade representative when he takes the White House again in January.

Just before the presidential election last week, Lighthizer blamed free trade for the loss of domestic production and linked it to criticism of the U.S.’s huge trade deficit. Such an appointment will cause even more unrest in the British government and heighten fears that Trump will follow through on his threat to impose tariffs that could cause enormous damage to the British economy.

Last Wednesday, Goldman Sachs cut its 2025 UK economic growth forecast to 1.4% from 1.6%, citing possible higher US tariffs. The National Institute of Economic and Social Research said a trade war over tariffs would cut Britain’s already sluggish growth by 0.7% and 0.5% in the first two years of Trump’s second term.

Writing today observerFormer British ambassador to Washington Kim Darroch said he expects Trump to follow through on his threat of tariffs. Darroch describes the impact on Britain’s relations not only with the US but also with the EU: “When it comes to tariffs, I expect the exact opposite of a mere threat.

“I think Trump will immediately impose tariffs on all US imports and say, ‘If you want them lifted, offer me something to rebalance trade.'” The EU will almost certainly hit back; and the UK will face a difficult choice. Are we complying with the EU’s retaliatory tariffs? Or should we aim for a bilateral agreement, such as a free trade agreement?

“I think that Trump would offer a free trade agreement like in 2017: But the biggest demand from the USA would be, as then, unrestricted access to the British market for the low-cost products of the US agricultural sector, hormone-treated beef” and chlorine-washed chicken included. So the stark choice would be: party for the EU or sacrifice our agriculture.”

Regarding Ukraine, Darroch points out that if Trump supports a peace deal that looks like a defeat for Volodymyr Zelensky, with Russia retaining the conquered territories and Ukraine must promise never to join NATO Washington.

“So another difficult decision for the prime minister: Do you try to mobilize Europe to reject US ideas and increase support for Ukraine, or do you pack up our tents, accept defeat and go home?”

Trump’s dramatic triumph has sparked fierce debate in Westminster over how Keir Starmer’s government can best respond to such an unpredictable figure in the White House.

Former British ambassador to Paris and the country’s first national security adviser, Peter Ricketts, said Starmer should avoid appearing “too needy” or too eager to abuse him. “I guess what I would say is make your contact with Trump count, rather than just trying to get in the door first at the White House, which was more the tendency of some of your predecessors. The danger with this is that if he does something you strongly disagree with, you will embarrass yourself.”

I’m also writing today observer Peter Hyman, who has advised both Tony Blair and Keir Starmer, said Labor must learn lessons from why Americans voted for Trump because he could fall victim

to a similar phenomenon in Great Britain. Too many people, he writes, viewed Trump supporters as members of the “deluded masses” who were too stupid to realize he was a monster, while many actually had good reasons to vote for him.

“The truth is that the Democrats have lost people – heads and hearts. They failed to be good technocrats (the head) with high inflation and open borders. And it failed to tell a story in which struggling working-class families felt seen and heard (the heart).

“That is now the challenge for Democrats in the US as they fight to win back power, and for Labor in the UK as they try to make their victory count.

“Trump’s victory could be a moment, like Thatcher’s victory in 1979, when the old rules of politics are turned on their head and when the building blocks of a new progressive project must be rebuilt, brick by brick, from the ground up.”