UK not to be a target of Donald Trump’s tariffs, Chancellor Rachel Reeves says
Chancellor Rachel Reeves has indicated she will overrule environmental objections to a third runway at Heathrow in order to prioritise economic growth, a position likely to bring her into conflict with colleagues including energy secretary Ed Miliband.
Speaking as she began a 48-hour pitch to international investors at the World Economic Forum in Davos, Ms Reeves said she would back infrastructure projects even where they are unpopular.
The expansion of Heathrow has been debated for almost 20 years but despite the consistent support of business groups and a consensus it would boost economic activity, environmental and political objections have prevented it.
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Asked directly if she would now put the runway, along with expansion at Gatwick and Luton ahead of the UK’s net zero commitments, Ms Reeves said: “I’m not going to comment on speculation, but what I would say is when the last government faced difficult decisions about whether to support infrastructure investment, the answer always seemed to be no.
“We can’t carry on like that, because if we do, we will miss out on crucial investment here into Britain. You’ve already seen a number of decisions, including on Stansted and City Airport, on energy projects, on transport infrastructure, because we are determined to grow the economy.”
The chancellor’s trip to Davos comes with her economic program under increased scrutiny after a bumpy start to the new year, including a rise in borrowing costs and data showing the economy has stagnated since the election.
Business groups have also questioned the increase in employment costs in the budget, but Ms Reeves insisted the UK is competitive internationally, and has a strong case to make to international markets.
“If you look at the UK’s taxation compared with countries around the world, we remain highly competitive, we have the lowest corporation tax in the G7. Amongst European countries, we have some of the lowest employment taxes, So Britain is an attractive place to invest.”
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Ms Reeves also hailed the removal of the chair of the Competition and Markets Authority, a regulator regularly blamed for unnecessarily slowing down deals, as a sign she was serious about growth.
“We’ve got huge strengths as a country and this government is reforming the planning system, reforming the regulation system, making it easier for businesses to get things done, all with the purpose of making working people better off,” she said.
UK not a target
The chancellor said she did not think the UK would be a target for tariffs threatened by president Donald Trump, largely because Britain has a trade deficit with America, and that she planned to meet the incoming Treasury secretary once he is confirmed.
Growth trade offs thrown into stark relief
The saga of a third runway at Britain’s biggest airport encapsulates, perhaps better than any, the trade-offs required to prioritise growth.
Airport expansion is a proven vehicle for growth. Heathrow’s current investors are desperate to expand, despite the cost of complications.
But for a decade political opposition, from Boris Johnson to Sadiq Khan, has stood in the way.
Of course, there are sound environmental arguments against that a government committed to net zero by 2050 might consider, and Ed Miliband can be expected to make.
But if growth really is the priority then at some point they have to choose.
Given the multiple avenues for objection and the strength of feeling inside and outside cabinet, Ms Reeves’ position does not mean that a runway is now more likely than it was six months ago.
It may however be less unlikely, and as a short-term signal to the investors she is courting in Switzerland, that is a start.
“I believe in free and open trade, and I’ll be making that case to my counterparts in the United States. I’m excited about the opportunity to work with the new Trump administration.
“Trade between the UK and the US is worth £300bn a year, a million Brits work for American firms, a million Americans work for British firms, so our economies are closely intertwined, and I look forward to enhancing and strengthening that relationship.”
Privately some international investors and British company bosses in Davos have questioned the clarity of Ms Reeves’s message, but she has received public support from significant companies.
Bill Winters, the chief executive of bank Standard Chartered, told Sky News: “I think the chancellor is doing the right thing in terms of putting the sign out that the UK is open for business.
“She’s also made very clear statements about the fact that we’re going to reduce some of the red tape set back to regulation in a way that’s safe and sound. Exactly how that’s going to work through, we’ll see. So I’m encouraged, but obviously, she’s got a huge, huge challenge.”
The UK and India have struck an “ambitious” trade deal that will slash tariffs on products such as whisky and gin.
The agreement will also see Indian tariffs cut on cosmetics and medical devices and will deliver a £4.8bn boost to the UK economy, according to the government.
It is also expected to increase bilateral trade by £25.5bn, UK GDP by £4.8bn and wages by £2.2bn each year in the long term.
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The news will be a welcome boost for the government following poor local election results, which saw Labour lose the Runcorn by-election and control of Doncaster Council to a resurgent Reform UK.
What will also be touted as a victory for Downing Street is the fact the government managed to strike a deal with India before the White House.
Speaking to reporters on Tuesday, Sir Keir Starmer hailed the “historic day for the United Kingdom and for India”.
“This is the biggest trade deal that we, the UK, have done since we left the EU,” the prime minister said.
What trade-offs are in the ‘historic’ deal with India?
This is the most significant trade deal Britain has negotiated since Brexit. It has been three years in the making with round the clock negotiations taking place in recent days.
Britain and India were coming from very different starting points. India’s economy is notoriously protectionist, with average tariff rates floating at around 130%. The UK, by comparison, is a very open economy. Our tariff rates hover around 5%. It means there were many prizes on offer for UK exporters, who are eyeing up a rapidly growing economy with increasingly powerful consumers.
The government will point to considerable concessions on 90% of tariff lines, 85% of them will go down to zero within the decade. It includes wins on whisky, which within ten years will be halved from the current 150%. No other country has managed to get India to move on that.
Of course there are trade-offs involved. The UK has agreed to lower tariffs on Indian textiles and apparel- a big employer in India. It will also make it easier for Indian professionals to come to the UK, something the Indians have been pushing hard on. However, there will be no formal changes to immigration policy.
Both countries have also refused to budge on certain industries. The UK has not lowered tariffs on milled rice, out of fear it could decimate native industries. The same applies to dairy for the Indians. Both sides have agreed quotas on cars for the same reason.
The Indians were pushing for an exemption for its high emission industries from the UK’s upcoming carbon tax. It is understood that will not happen.
“And it’s the most ambitious trade deal that India has ever done. And this will be measured in billions of pounds into our economy and jobs across the whole of the United Kingdom.
“So it is a really important, significant day. “
In a post on X, Indian Prime Minister Narendra Modi also welcomed the agreement as a “historic milestone” and added: “I look forward to welcoming PM Starmer to India soon.”
Negotiations for the deal relaunched in March after stalling under the Tory government over issues including trade standards and the relaxation of visa rules for Indian workers.
Overall, 90% of tariff lines will be reduced under the deal, with 85% of those becoming fully tariff-free within a decade.
Whisky and gin tariffs will be halved from 150% to 75% before falling to 40% by year ten of the deal, while automotive tariffs will go from more than 100% to 10% under a quota, the Department for Business and Trade (DBT) said.
For Indian consumers, there will be reduced tariffs on cosmetics, aerospace, lamb, medical devices, salmon, electrical machinery, soft drinks, chocolate and biscuits.
Meanwhile, British shoppers could see cheaper prices and more choice on products including clothes, footwear, and food products including frozen prawns as the UK liberalises tariffs.
India’s trade ministry said that under the deal, 99% of Indian exports will benefit from zero duty, Britain will remove a tariff on textile imports and Indian employees working in the UK will be exempt from social security payments for three years.
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Shadow trade secretary Andrew Griffith added: “It’s good to see the government recognise that reducing cost and burdens on businesses in international trade is a good thing, and that thanks to Brexit we can do.
“But it would be even better if they would apply the same reasoning to our domestic economy, where they remain intent on raising taxes, energy costs and regulatory burdens.”
The news was also welcomed by business group the British Chamber of Commerce, which said it was a “welcome lift for our exporters”.
William Bain, head of trade policy, said: ”Against the backdrop of mounting trade uncertainty across the globe, these tariff reductions will be a big relief. Products from Scotch whisky to clothing will benefit and this will give UK companies exporting to India a clear edge on increasing sales.
“The proposals for a follow-up investment treaty will also provide a solid platform to grow manufacturing and other sectors in our two economies.”
Representative Maxine Waters, ranking member of the House Financial Services Committee (HFSC), led Democratic lawmakers out of a joint hearing on digital assets in response to what she called “the corruption of the President of the United States” concerning cryptocurrencies.
In a May 6 joint hearing of the HFSC and House Committee on Agriculture, Rep. Waters remained standing while addressing Republican leadership, saying she intended to block proceedings due to Donald Trump’s corruption, “ownership of crypto,” and oversight of government agencies. Digital asset subcommittee chair Bryan Steil, seemingly taking advantage of a loophole in committee rules, said Republican lawmakers would continue with the event as a “roundtable” rather than a hearing.
HFSC Chair French Hill urged lawmakers at the hearing to create a “lasting framework” on digital assets, but did not directly address any of Rep. Waters’ and Democrats’ concerns about Trump’s involvement with the crypto industry. He claimed Waters was making the hearing a partisan issue and shutting down discussion on a digital asset regulatory framework.
This is a developing story, and further information will be added as it becomes available.
Veteran US Internal Revenue Service (IRS) official Trish Turner was appointed to lead the agency’s digital assets division following the departure of two key crypto-focused executives.
Turner, who has spent over 20 years at the IRS and most recently served as a senior adviser within the Digital Assets Office, will now head the unit, according to a report from Bloomberg Tax citing a person familiar with the situation.
Her promotion marks a significant leadership transition at a time when US crypto tax enforcement is facing both internal and external pressures.
On May 5, Sulolit “Raj” Mukherjee and Seth Wilks, two private-sector experts brought in to lead the IRS’s crypto unit, exited after roughly a year in their roles.
Mukherjee served as compliance and implementation executive director, while Wilks oversaw strategy and development. Wilks announced his departure on LinkedIn, while Mukherjee confirmed his decision in a statement to Bloomberg Tax.
“The reality is that federal employees have faced a very difficult environment over the past few months,” Wilks wrote. “If stepping aside helps preserve someone else’s job, then I am at peace with the decision.”
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IRS ramps up crypto scrutiny
The IRS has ramped up its focus on cryptocurrency in recent years, increasing audits and criminal probes targeting digital asset transactions.
It also attempted to introduce broad crypto broker reporting requirements, which drew sharp criticism from industry stakeholders and was eventually overturned by President Donald Trump.
Set to take effect in 2027, the so-called IRS DeFi broker rule would have expanded the tax authority’s existing reporting requirements to include DeFi platforms, requiring them to disclose gross proceeds from crypto sales, including information regarding taxpayers involved in the transactions.
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Turner’s leadership also comes during a shift in Washington’s approach to crypto regulation.
With the return of the Trump administration in January, federal agencies have scaled back regulations perceived as burdensome to digital asset innovation.
For instance, the Securities and Exchange Commission has dropped or paused over a dozen enforcement cases against crypto companies. Additionally, the Department of Justice has announced the dissolution of its cryptocurrency enforcement unit, signaling a softer approach to the sector.
Internally, the IRS is also navigating instability. Over 23,000 employees have reportedly expressed interest in resigning after Trump reintroduced a deferred resignation policy, raising concerns about long-term staffing and morale within the agency.
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