Chancellor Rachel Reeves outlines red lines for US trade deal
Britain will not lower its standards or water down regulation in exchange for a trade deal with the US, the chancellor has confirmed.
Rachel Reeves was speaking ahead of a pivotal meeting with her American counterpart in Washington DC.
In an interview with Sky News, Ms Reeves said she was “confident” that a deal would be reached but said she had red lines on food and car standards, adding that changes to online safety were “non-negotiable for the British government”.
The comments mark the firmest commitment to a slew of rules and regulations that have long been a gripe for the Americans.
Rachel Reeves spoke to Sky’s Gurpreet Narwan
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The US administration is pushing for the UK to relax rules on agricultural exports, including hormone-treated beef.
While Britain could lower tariffs on some agricultural products that meet regulations, ministers have been clear that it will not lower its standards.
However, the government has been less firm with its stance on online safety.
A tech red line
The US tech industry has fiercely opposed Britain’s Online Safety Act, which was introduced in 2023 and requires tech companies to shield children from harmful content online.
In an earlier draft UK-US trade deal, the British government was considering a review of the bill in the hope of swerving US tariffs.
However, the chancellor suggested that this was no longer on the table.
“On food standards, we’ve always been really clear that we’re not going to be watering down standards in the UK and similarly, we’ve just passed the Online Safety Act and the safety, particularly of our children, is non-negotiable for the British government,” she said.
She added that Britain was “not going to water down areas of road safety”, a move that could pave the way for American SUVs that have been engineered to protect passengers but not pedestrians.
While non-tariff barriers will remain intact, it was reported on Tuesday night that the UK could lower its automotive tariff from 10% to 2.5%.
The calculations behind Reeves’s red lines
What can Britain offer the Americans if it’s not prepared to lower its standards?
Donald Trump has previously described non-tariff barriers that block US exporters as “cheating”.
Britain does have some scope to bring down tariff rates – and Rachel Reeves suggested that this was her focus – but ours is already a highly open economy, we don’t have huge scope to cut tariff rates.
The real prize for the Americans is in the realm of these non-tariff barriers.
There has been much speculation about what the UK could offer up, but the chancellor on Wednesday gave a comprehensive commitment that she would not dilute standards.
There are many who will breathe a collective sigh of relief – from UK farmers to road safety campaigners and parents of young children.
While the government is sensitive to any potential public backlash, it also has another factor to think about.
When Ms Reeves arrives back home, she will begin preparations for a UK-EU summit in London next month.
The UK’s food and road safety standards are, in many areas, in sync with Europe, and Britain is seeking even deeper integration.
Lowering standards for the Americans would make that deeper alignment with the Europeans impossible.
The chancellor has to decide which market is more valuable to Britain.
The answer is Europe.
Back at home, the chancellor suggested that she was still open to relaxing rules on the City of London, even though global financial markets have endured a period of turmoil, triggered by President Trump’s trade war.
Reforms at home?
In her Mansion House speech last November, the chancellor said post-2008 reforms had “gone too far” and set the course for deregulating the City.
Asked if that was a wise move in light of the recent sharp swings in the financial markets, Ms Reeves said: “I want regulators to regulate not just for risk but also for growth.
“We are making reforms and we have set out new remit letters to our financial services regulators.”
Britain’s borrowing costs hit their highest level in almost 30 years after Mr Trump’s Liberation Day tariffs announcements, a stark reminder that policy decisions in the US have the power to raise UK bond yields and in turn, affect the chancellor’s budget, dent her already small fiscal headroom and derail her plans for tax and spend.
However, the chancellor said she would not consider adapting her fiscal rules, which include a promise to cover day-to-day spending with tax receipts, even if it gives her more room to manoeuvre in the face of volatility.
“Fiscal rules are non-negotiable for a simple reason, that Britain must offer under this government fiscal and financial stability, which is so important in a world of global uncertainty,” she said.
Global foreign exchange and payments platforms are lobbying hard against stablecoins, which stand to significantly disrupt their business models, investor Kevin O’Leary said during a keynote address at Consensus 2025.
Legacy forex and payments platforms often extract large fees for servicing cross-border cash transfers and stand to lose out on revenue if regulated stablecoins become accepted as a cheaper, faster alternative, O’Leary said at the Toronto conference.
“Currency trading is a multi-trillion dollar market — and it’s old and ugly and inefficient,” O’Leary said, adding that “[ t]he biggest threat to that monopoly or oligopoly is a regulated stablecoin.”
“Once that’s approved, the multi-trillion dollar FX market becomes efficient, transparent, and inexpensive,” he said.
Stablecoin legislation
US lawmakers are working on legislation that stands to accelerate global stablecoin adoption, O’Leary added.
US Senators are aiming to pass the so-called Genius Act — a framework for regulating stablecoins — before the end of May. “As soon as the SEC approves the stablecoin act, every regulator in the US’s circle — Abu Dhabi, Switzerland, England — will follow,” O’Leary said.
“Who’s worried about this? The financial services industry. They hate this idea, and they’re working very hard to stop that bill from happening right now,” he added.
O’Leary said regulatory clarity for stablecoins may be a precursor to broader cryptocurrency reform that could potentially unlock trillions of dollars in institutional capital.
“When this language comes out, people will see really good refinement, a lot of progress, on things like consumer protection, bankruptcy protection, and ethics,” US Senator Kirsten Gillibrand said during an event hosted by Coinbase’s lobbying arm, Stand with Crypto.
As of May 15, stablecoins are collectively worth nearly $250 billion in market capitalization, according to data from CoinGecko. Tether’s US-dollar pegged stablecoin USDT is the leader, with a market cap of around $150 million, the data showed. It’s followed by Circle’s USDC, another US-dollar pegged stablecoin with a market cap of more than $60 billion.
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Coinbase chief legal officer Paul Grewal addressed some of the concerns raised by US lawmakers and industry leaders around President Donald Trump’s crypto ventures, and how they may affect related legislation.
Speaking at the Consensus conference in Toronto on May 15, Grewal said there had been “hiccups” in Congress since the Senate Banking Committee voted to advance the Guiding and Establishing National Innovation for US Stablecoins, or GENIUS Act, in March. Though Grewal said there were disputes over “substantial issues that need to be addressed” in the bill, he hinted that Trump’s involvement in the industry was a “complicating factor.”
“The discussion around the president’s support for a certain memecoin or two and other efforts does add a certain level of challenge to the effort to get Democrats and Republicans aligned on the right way to regulate the [spot market], but I have confidence that the Senate and the House are going to sort all that out,” said Grewal.
Democrats including Senator Elizabeth Warren explicitly called out the Trump family’s crypto venture, World Liberty Financial, and its USD1 stablecoin in opposing the GENIUS Act. However, some of the bill’s supporters, like Senator Kirsten Gillibrand, who proposed an earlier version of the legislation, said they would remove language specifically targeting the president’s crypto ventures.
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Whatever the terms for modifications to the bill may be, many lawmakers still expect the Senate to take up another vote in a matter of days. Punchbowl reported on May 15 that Democrats “won major victories” after receiving assurances that some of their concerns around consumer protection, Anti-Money Laundering, and national security safeguards would be addressed.
First stablecoins, then a market structure bill?
The House of Representatives is also considering draft legislation for a digital asset market structure bill, a different iteration of the FIT21 bill that passed the chamber in May 2024. Democratic representatives have similarly pushed back on the legislation, citing “Trump’s crypto corruption.”
“I think we’re gonna learn a lot from the progress we see just in the next few days on stablecoins on the appetite to really tackle all these problems on any schedule that resembles the one that was laid out not long ago by the White House and certain leaders in Congress,” said Grewal.
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Stablecoin regulation is “the next catalyst” for the crypto industry and could lead to unprecedented “appetite from institutional investors,” according to Ash Pampati, head of ecosystem at the Aptos Foundation.
In an interview with Cointelegraph at Consensus 2025 in Toronto, Pampati said that “the whole world outside of the United States […] has already jumped onto this [stablecoins],” adding that “the US is […] at the doorstep.”
“I really think about new use cases that can emerge because of the borderless nature of stablecoins, because of the efficiency of the dollar onchain,” he said. “If you’re trying to send money to your friend in Nigeria, why do you have to go through a bunch of hoops?”
Stablecoins are often used to transfer money across borders, as they are easier and cheaper to transfer than traditional finance methods such as wire transfers. They are also used to hedge against fiat currency, which, in emerging markets, can devalue significantly in a short period of time.
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According to a new survey from Fireblocks, Latin America leads all regions in real-world use of stablecoins, with 71% of respondents saying they use the technology for cross-border payments. Half of respondents in the region, which encompasses a number of developing countries, say they expect stablecoins to offer lower transaction costs than traditional finance rails.
“I think you will see an amazing appetite from institutional investors […] we can really think, rethink the fintech space across B2B, B2C with fully onchain rails,” Pampati said.
86% of firms ready for stablecoins
According to Fireblocks’ survey, 86% of respondents say that their company shows “infrastructure readiness.” In other words, their companies are ready to adopt stablecoin. In addition, 75% of respondents say they see clear customer demand for stablecoins.
However, regulation still holds a large role in determining adoption. The survey shows that confidence in stablecoins is rising, not only because of the technology but also because regulatory barriers have fallen.
Agencies around the world have sought to regulate stablecoins. The progress has included the European Union’s MiCA regulation, various acts in the United Arab Emirates, and even the United States’ GENIUS Act, which reports indicate has regained some bipartisan support after a failed May 8 vote.
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