Reeves: US tariffs will have huge implications but UK banking system resilient

Rachel Reeves has said US tariffs will “continue to have huge implications” before insisting the Bank of England believes the UK banking system is “resilient”.

The Chancellor, in a message to families and businesses, said “we have your backs” as she made a statement to the House of Commons at the beginning of Treasury questions on Tuesday.

Ms Reeves also said “all of the decisions” made by the Government will be “underpinned by the stability of our non-negotiable” fiscal rules, which rule out borrowing to fund day-to-day spending.

London’s FTSE 100 share index rose in the first few minutes of trading on Tuesday, as a sense of optimism returned to the financial markets after several days of heavy losses.

The index, which tracks the UK’s top 100 listed companies, was up more than 1% shortly after markets opened on Tuesday.

It follows a more positive session for Asian markets, with some indexes making gains after suffering steep falls in previous days.

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Deal

The next stage of US President Donald Trump’s tariff programme comes into force in the early hours of Wednesday, with import taxes at 20% for goods from European Union nations and 24% from Japan.

The UK Government is pushing for a deal with the White House in the hope of easing the 10% tariff on US imports of British goods, along with a 25% tariff on cars and separate import taxes for steel and aluminium.

Ms Reeves told MPs: “The United States’ decision to impose tariffs has had and will continue to have huge implications for the world economy.

“These implications have been reflected in the reaction that we’ve seen in global markets in recent days, which the financial authorities have of course been monitoring closely.

“This morning I spoke to the governor of the Bank of England, who has confirmed that markets are functioning effectively and that our banking system is resilient.

“I know too that this is an anxious time for families who are worried about the cost of living – we have your backs.

“And British businesses who are worried about what a changing world will mean for them – we have your backs too.

“This Government is clear-eyed that our response to global change cannot not be to watch and wait, but instead to act decisively, to take the right decisions that are in our national interest, protecting working people.

“All of the decisions that we make as a Government will be underpinned by the stability of our non-negotiable fiscal rules.

“A trade war is in nobody’s interest, it is why we must remain pragmatic, cool-headed and pursue the best deal with the United States that is in our national interest. This remains our priority.”

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Barriers

Ms Reeves went on to say the UK is working with its international allies to “reduce the barriers to trade right across the world”, adding: “Over recent days I have held discussions with my counterparts in Canada, Australia, Ireland, France, Spain, and with the European Commission.

“We will pursue these talks in earnest. Tomorrow I will hold talks with the Indian government as part of our two nations’ economic and financial dialogue as we seek to secure a new trade deal with India.”

For the Conservatives, shadow chancellor Mel Stride said: “Free trade has been the bedrock of prosperity for our country and many countries around the world for decades. It has raised billions out of poverty.

“Tariffs are the enemy of free trade, and we on this side of the House will do whatever we can to assist the Government in getting those tariffs down.

“Having said that, of course, we will never cease becoming an effective Opposition, vigorously holding them to account not least on the disastrous decisions that they have taken already in respect of our economy, but we will be responsible when it comes to these matters, particularly where market sensitivities are engaged.”

"Unprecedented"

Health Secretary Wes Streeting said the steps the US has taken are “unprecedented in terms of global trade” and warned a global trade war could cause problems with the supply of medicines.

“We are constantly watching and acting on this situation to try and get medicines into the country, to make sure we’ve got availability, to show some flexibility in terms of how medicines are dispensed, to deal with shortages,” he told Sky News.

“But whether it’s medicines, whether it’s parts for manufacturing, whether it’s… the ability of businesses in this country to turn a profit, this is an extremely turbulent situation.”

Mr Streeting told the BBC “the NHS is not for sale and our patients’ data is not for sale” as part of any deal with the US.

The UK has not retaliated so far, but has drawn up a 417-page list of possible products which could face tariffs if Prime Minister Sir Keir Starmer decides to put import taxes on US goods.

Sir Keir will appear before the Liaison Committee of senior MPs on the last day the Commons sits before it heads into the Easter break.

The impact of Mr Trump’s tariffs is likely to be on the agenda for the Liaison Committee, where the Prime Minister may also be questioned about the war in Ukraine, conflict in the Middle East, and the US president’s announcement that America will hold direct talks with Iran about its nuclear programme.