Rachel Reeves has signalled the UK could slash tariffs on US car imports as part of negotiations with the Trump administration to secure a trade deal.
It follows the Chancellor indicating a willingness to reduce the current 10 per cent levy on US vehicles to potentially as low as 2.5 per cent.
It comes as the UK looks to drastically reduce the punishing 25 per cent tariffs imposed by Trump last month on British car exports to the US.
"I want to see tariff and non-tariff barriers reduced between the UK and the US," Reeves told the BBC yesterday ahead of meetings with senior US economic officials.
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Trump imposed a 25 per cent tariff on all car imports to the US
PAAccording to reports, ministers have indicated a willingness to reduce long-standing UK import tariffs on cars to help incentivise the US to lower its levy, which could have devastating impacts on the car sector.
Earlier this month, the Institute for Public Policy Research warned that more than 25,000 direct jobs in the UK car manufacturing industry could be at risk due to the tariff.
The move by Reeves could also reduce the cost of US-made vehicles such as Cadillacs, Jeeps and Chevrolets in the UK. In return, the UK hopes to secure lower tariffs on its car exports from UK makers like Jaguar and Land Rover.
Reports also revealed that US car imports into the UK are worth about £1billion, but in sharp contrast, exports have been found to be worth a shocking £6.4billion.
Last week, US Vice-President JD Vance said there was a "good chance" a trade deal could be reached with the UK. However, Reeves has drawn a firm line on maintaining British food standards in the negotiations.
She said: "The US administration respects and understands that we have high standards to support British farming, and to support British consumers, and we're not going to be relaxing those standards."
But Andrew Bailey, the Governor of the Bank of England, has warned that a US trade deal would not protect Britain from the wider impact of Trump's tariffs.
Speaking at a conference in Washington, Bailey stated: "Fragmenting the world economy will be bad for growth.
"The UK's a very open economy, and therefore it's not just the relationship between the US and the UK, it's the relationship between the US, the UK and the rest of the world that matters here."
The aftermath of the car tariff announcement has already impacted the UK with major car makers like Aston Martin reducing shipments to the US as well as expecting to lose roughly £30million in gross profit.
Aston Martin chief executive Adrian Hallmark said: "We anticipated some risks in the plan and built in contingencies. This now makes it tighter to hit what we promised."
On Wednesday, Bailey added that the UK must take the risk of trade wars hitting global economic growth "very seriously".
Despite the broader concerns, Reeves did note the importance of US trade priorities: "I do understand the concerns the US has about countries around the world that run large and persistent trade surpluses with the US."
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The US tariffs could put 25,000 UK jobs at risk as the car manufacturing sector faces uncertainty GETTYBut she also pointed out that "the UK is not one of those countries", so "there is a deal to be done between the UK and the US." But Reeves added that she understood "the need to rebalance the global economy."
To help countries get adjusted to the tariff, Trump announced earlier this month a 90-day pause on the official start of the levy. "I thought that people were jumping a little bit out of line, they were getting yippy, you know," he said.
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