Reeves signals possibility of lower tax on US car imports

The chancellor is in Washington DC as pressure mounts over dire IMF predictions of effect of tariffs on Britain's economy

- DAVID MADDOX

Rachel Reeves has signalled that she is prepared to slash tariffs on US automobile imports to the UK in a bid to land a trade deal. According to a report in The Wall Street Journal, a document has been circulating that suggests the UK could reduce tariffs from 10 per cent to 2.5 per cent on US vehicles and parts.

The apparent concession was revealed as the chancellor arrived in Washington DC for a summit at the International Monetary Fund (IMF) and ahead of a meeting with US Treasury secretary Scott Bessent. The report is the second concession understood to be on the table from the UK after reports that the government could shelve a planned digital services tax.

Speaking in Washington to business leaders, Ms Reeves did not talk about specific proposals but said she wants “to see tariff and non-tariff barriers reduced between the UK and the US”.

It came as she attempted to play down the urgency of getting a US trade deal over the line despite pressure building on her to do so amid dire predictions about the UK economy. With the clock ticking on Donald Trump’s 90-day pause in the implementation of US tariffs, which will end in early July, the chancellor tried to not blink over the potential desperation of the UK’s position as she attended the summit in Washington.

The IMF has warned that with Donald Trump’s tariffs of at least 10 per cent, the UK would have the highest inflation in the West of 3.1 per cent, while the growth forecast for 2025 was downgraded from 1.6 per cent to 1.1 per cent. But despite these warnings, the chancellor told ITN in Washington that she is in “no rush” to get a trade deal done, and pledged that any deal agreed “will need to be in the British national interest”.