Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Rachel Reeves will use her keynote Mansion House speech on Thursday to espouse the benefits of free and open trade in a direct plea to the protectionist US president-elect Donald Trump.
The UK chancellor will use her first Mansion House address to set out the government’s plans to stimulate economic growth through the three principles of “stability, investment and reform”.
But she will also express her belief that free trade has brought lasting benefits across the world. “The chancellor is expected to champion her belief that free and open trade is what makes countries richer,” the Treasury said.
Trump has threatened to impose tariffs of up to 20 per cent on all imports into the US, with higher levies of 60 per cent on products coming from China, as a way to protect American manufacturers.
He has already asked arch-protectionist Robert Lighthizer to return as his US trade representative when he becomes president in January.
Earlier this week, Reeves said she would make “strong representations” to the incoming Trump administration about the economic benefits of free trade.
She told the Treasury committee: “The US also benefits from that access to free and open trade with us and other countries around the world, and it’s what makes us richer as societies, to benefit from that open trade.”
But she added that the British government was preparing for different eventualities: “I absolutely do not want to sound in any way sanguine. On the other hand, I am optimistic about our ability to shape the global economic agenda.”
Darren Jones, chief secretary to the Treasury, said on Sunday that the government was considering potential responses to the imposition of tariffs by Washington.
“Officials will be considering lots of different scenarios, but the position of the government is that we support free trade and support the trading relationship between the US and UK, it’s a very strong, very fruitful relationship,” he told Sky News.
“The government prepares for all scenarios, and we will work with our American counterparts in the normal way,” he said.
Asked by the BBC what would happen if the US imposed tariffs on the UK, Jones said: “If that situation were to arise in the future, we would of course have to respond to it. What I can’t tell you today is how.”
Lighthizer, a former lawyer for the US steel industry, served under the last Trump presidency when Washington launched a trade war with China and slapped tariffs on billions of dollars’ worth of imports.
Economists have warned the prospect of a potential trade war could damage economic development, with Goldman Sachs earlier this week cutting its forecast for UK economic growth next year from 1.6 to 1.4 per cent, citing US tariffs.
The return of Trump will raise fresh doubts over the likelihood of a post-Brexit UK-US trade deal ever being signed by London and Washington.
When Lighthizer was previously US trade representative, the US did agree limited trade deals with Japan and China.
However, the new Trump administration would be likely to impose conditions on a trade agreement with Britain that could be hard for London to accept.
Sir Kim Darroch, former UK ambassador to Washington, said in the Observer newspaper that he believed a free trade agreement would be on offer from the incoming Trump regime.
“But the top US demand, as was the case then, would be unrestricted access to the UK market for the low-cost products of the US agricultural sector, hormone treated beef and chlorine-washed chicken included,” he said.
“So the stark choice would be: side with the EU or sacrifice our agriculture.”
