Chancellor Rachel Reeves has indicated that the UK is unlikely to respond quickly to President Trump should he impose damaging tariffs on goods coming from Britain.
In a hearing at the Treasury Committee on Wednesday, Reeves said the UK would not “rush into action to get a quick headline”.
“The prize on offer is a good economic agreement between us and the United States,” Reeves said. “We won’t do anything to put that in jeopardy.”
Reeves’ comments suggest the UK may not retaliate in the short term if tariffs are imposed.
Trade deal negotiations are also “ongoing”, according to Reeves.
“We do not want to see trade barriers go up. Indeed, we want to see trade barriers fall.”
Prime Minister Keir Starmer has said that the UK is “preparing for all eventualities” ahead of Trump’s ‘Liberation Day’ announcements.
Reeves warned that even if the UK avoids tariffs and agrees a trade deal with the US,it would not be “out of the woods”.
“The specific tariffs on the UK are less relevant to growth and inflation than the global picture because we are an open trading economy.”
The European Union has drawn up a “strong plan” to retaliate against Trump’s tariffs, Commission chief Ursual von der Layen said on Tuesday.
Reeves said she spoke to EU economic commissioner Valdis Dombrovskis ahead of the hearing at the Treasury Committee.
The US president is set to announce sweeping tariffs on imports at around 21:00 BST on Wednesday. The tariffs are expected to wreak havoc on the global economy.
The Chancellor was also questioned by Liberal Democrat MP Bobby Dean on whether she had left herself enough headroom in “volatile times”.
“There’s a balancing act when you’re doing a spring statement or a budget around what you want to do on taxes, on spending and on headroom, everything else being equal. Would we like more headroom? Of course we would.”
“I think we’ve got the balance about right.”
Reeves did not rule out further tax rises in the autumn.
She also claimed the Treasury did not restore its headroom to the exact figure of £9.9bn on purpose.
“It was by accident, rather than design, that it was exactly the same amount of headroom [as in the Autumn Budget].”