The UK is ‘not part of the problem’ when it comes to US trade, says the British Chancellor of the Exchequer

The U.K. is “not part of the problem” when it comes to the “persistent” trade deficits that President Donald Trump wants to tackle, the country’s finance minister told CNBC on Wednesday.

“I understand that president [Donald] Trump is concerned about countries that run large and persistent trade surpluses with the US. 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 here. So we, the UK, increased trade with President Trump the last time he was in office,” she said, speaking to CNBC on the sidelines of the World Economic Forum in Davos, Switzerland.

President Trump is extremely irritated by the US trade deficit with many partners, but trade with the UK was generally more balancedoscillating between surplus and deficit in recent years.

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

The British Chancellor of the Exchequer is in Davos this week, trying to attract global investment to the British economy. The trip comes as Reeves has come under constant pressure since unveiling the Treasury’s spending and tax plans last autumn. A package of measures presented in the ‘Autumn Budget’ focused on increasing the tax burden on British companies and drew widespread criticism from industry leaders, who said the move would stifle investment, jobs and growth.

Recent data releases, including lower than expected growth data for November i higher than the expected cost of government borrowing in December, they also contributed to the persistent uneasiness in the Ministry of Finance.

The U.K. found itself in an even bigger spot at the start of the year, as interest rates demanded by investors to hold U.K. bonds — known as gilts — rose sharply, reflecting market jitters about the U.K.’s economic outlook.

Reeves has stuck to her fiscal plans and said growing the UK economy is her top priority.

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

Unnatural friends in political ideology, Prime Minister Keir Starmer, Reeves and the British establishment are seeking to build good relations with the White House, especially amid the potential threat of universal trade tariffs.

Although China, Mexico, Canada and the EU are seen as the main targets of Trump’s trade tariffs, the UK could walk away relatively unscathed.

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