The UK will make “strong representations” to Donald Trump about plans for tariffs which could hit British economic growth, Rachel Reeves said.
The Chancellor added she is not “sanguine” about the president-elect’s plans, but is “optimistic” about the UK’s ability to shape the global economic agenda.
Mr Trump has said he wants to increase tariffs on goods imported from around the world by 10%, rising to 60% on goods from China, as part of his plan to protect US industry.
Ms Reeves said the UK will use the months before Mr Trump’s inauguration in January to “prepare for different eventualities”.
Higher US import tariffs would reduce global economic growth by about one percentage point over the next two years, according to analysis from the National Institute of Economic and Social Research (Niesr).
For the UK, Niesr estimates economic growth would slow to 0.4% in 2025, down from a forecast of 1.2%.
At the Commons Treasury Committee, Ms Reeves was told Goldman Sachs had downgraded its forecast for UK growth next year from 1.6% to 1.4% because of the tariff risk.
Ms Reeves said: “I think it is too early to start making changes to forecasts for our economy because of the election of a president in the United States.
“But I would say this, our trading relationship, our economic relationship with the United States, is absolutely crucial. The US are our single biggest trading partner. ”
She said in Mr Trump’s first term “we continued to have a strong and healthy economic relationship” with the US.
We will make strong representations about the importance of free and open trade, not just between ourselves and the United States, but globally
Ms Reeves added: “We’re not just a passive actor in this.
“It’s a trade relationship with the United States and we will make strong representations about the importance of free and open trade, not just between ourselves and the United States, but globally.
“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.”
Asked by Tory former Treasury minister John Glen if it is realistic to seek to influence Mr Trump, the Chancellor said: “We’ve got another couple of months before the inauguration.
“Obviously we will begin those conversations. We’ll prepare 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, as we have under successive governments.”
The FTSE 100 surged on opening after the US election result, rising by as much as 1.6% at one stage, but later lost most of these gains amid volatile afternoon trading.
Sterling was around 1% lower against dollar and nearly 1% higher against the euro.
