Bloomberg Talks: UK Chancellor Rachel Reeves Talks Trump Tariff Threats (Jan 20, 2026)

Episode Overview

In this timely episode from Davos, the UK Chancellor of the Exchequer, Rachel Reeves, sits down with Bloomberg to discuss the high-stakes economic and geopolitical environment. Key topics include the UK's approach to Donald Trump's tariff threats, current UK-US relations, economic and trade progress under the Labour government, handling of EU relations post-Brexit, the evolving approach to China, and domestic political stability. The conversation is candid, strategic, and frequently addresses calls for calm and pragmatism amid global uncertainty.

Key Discussion Points & Insights

1. The Trump Tariff Threats and UK-US Relations

• De-Escalation as the Priority

  • Reeves emphasizes the importance of avoiding escalation and stresses that the situation in Greenland is for its people to decide.

    "We absolutely want to de escalate. The future of Greenland is for the people of Greenland." (01:32)

• Stability in the UK’s Economic Approach

  • The Chancellor highlights six interest rate cuts since she took office, falling inflation, and successful trade deal negotiations (India, Korea, US).

    "We've had six interest rate cuts since I became Chancellor... we've secured a trade deal with the US as well, which means we've got lower tariffs than pretty much anywhere in the world." (01:32)

• US-UK Military Cooperation

  • Despite public criticisms, Reeves stresses continued mutual support, especially regarding strategic cooperation (Diego Garcia military base).

    "We're confident that that is the right decision and has had the support of the US administration." (02:33)

2. Trade, Tariffs, and Economic Strategy

• Response to Rising Global Protectionism

  • Reeves points out that while protectionism is increasing globally, barriers with the UK are falling due to proactive trade deals.

    "Trade barriers are going up around the world at the moment... in the last year, barriers to trade with the UK have fallen." (06:08)

• Improving EU Ties Post-Brexit

  • Rejoining the customs union or single market is ruled out, but sectoral deals and mobility schemes are actively pursued.

    "It was very clear in our manifesto that we wouldn't be rejoining the single market, the customs union, or bringing back free movement of labor." (12:06)

  • The UK is “fixing the mess” left post-Brexit and deepening cooperation with Europe.

    "We are now fixing that mess by improving trade relations and cooperation with our closest allies and neighbors." (06:56)

3. Central Bank Independence & Fiscal Policy

• Strong Support for Independent Economic Institutions

  • Reeves directly attributes UK economic stabilization to the restoration of respect for institutions like the Bank of England and the OBR.

    "One of the reasons why the UK has... had challenging economic times... is because the previous Conservative government... undermined the economic institutions that make Britain, have made Britain a safe and secure place to invest." (07:26)

• Interest Rate Cuts & Fiscal Consolidation

  • Details rapid interest rate reductions and the UK's leading performance on fiscal consolidation (according to the IMF).

    "...enabled those six cuts in interest rates, taking rates down to 3.75% is the fastest speed of rate reduction in the UK in 17 years." (07:26)

4. Visas and the UK as a Talent Magnet

• New Visa Announcements

  • Visa fee waivers for foreign businesses expanding in the UK, industrial strategy sectors, top academic talent, and Maths Olympiad gold medalists.

    "We are announcing today further changes in our global talent routes into the UK for three particular types of visa..." (10:10)

    • For foreign businesses expanding in the UK
    • For UK businesses in key sectors bringing in overseas talent
    • For top academic talent, including specific scholarships for Maths Olympiad winners

• Trade, Investment, and Talent Openness

  • Reeves insists on maintaining UK openness amid global trends toward barriers.

    "I want Britain, even in a world where others are putting up barriers... for Britain to be breaking down those barriers." (10:10)

5. UK-EU Relations and Customs Union Debate

• No Return to Customs Union
  • Reeves rejects rejoining on practical grounds, explaining that recent bilateral deals would be lost.

    "You would lose some of the benefits of those trade deals if you were to re enter a customs union... I don't think we need to return to the customs union to seize greater benefits of free and fair trade." (14:00)

6. UK-China Relations

• Approach to Chinese Embassy Approval

  • Frames it as standard diplomatic practice and a means to maintain open channels for dialogue and de-escalation.

    "It is right that China has an embassy in London in the same way that it's important and right that the UK has an embassy in Beijing." (15:12)

• Economic Dialogue with China Reinstated

  • UK has re-engaged with China after years of lost opportunity, with new dialogues and benefits secured for British businesses.

    "We restarted the economic and financial dialogue with China. It was the first time that we'd had... dialogue between our countries for six years." (15:12)

• Focus on UK National Interest

  • The priority is national interest: jobs, growth, and international trade — not aligning with any one bloc.

    "Our national interest means tackling the cost of living and growing our economy... And we only achieve that if we bring more investment in international and domestic and if we achieve more opportunities for firms in Britain..." (16:45)

7. Domestic Politics and Competitors (Farage, Labour Leadership, Local Elections)

• Dismissal of Labour Leadership Challenge Rumors

  • Reeves expresses confidence in Starmer's leadership and government stability.

    "I really don't think that people need to worry about [a challenge]. Keir won a massive majority in Parliament." (18:03)

• On Nigel Farage's Rising Profile

  • Reeves criticizes Farage’s “closed economy” stance, opposition to independent institutions and trade deals, and downplays his political significance.

    "He does not believe in the UK being open for trade... He's opposed every trade deal that this government has done... I'm not worried about Nigel Farage." (18:39, 19:52)

• Confidence in Labour’s Vision

  • Underlines that inflation is falling, investment is rising, and the government’s economic plan is working.

8. Tax Policy Outlook

• Stability and Headroom in Fiscal Policy
  • No anticipated tax increases; recent budget built a significant fiscal buffer.

    "We have just had a budget, and what I was able to do in that budget was to build a headroom of 21.7 billion pounds, more than doubling the headroom against our fiscal rules." (21:34)

  • Moves to only one fiscal event per year to reduce uncertainty and "speculation."

9. Davos and the UK's Global Pitch

• Message to Investors
  • UK's return to stability, openness to business, investment, and talent.

    "I hope people see in Britain... a country that has returned to stability, that is bringing investment, is changing how the economy works and is open. Open to business, open to trade, open to investment, and as I set out today, open to talent as well." (23:02)

Notable Quotes & Memorable Moments

• On Managing Uncertainty:

  "I would just urge people to keep cool heads." (06:05)

• On Previous UK Economic Policy:

  "The previous Conservative government, particularly under Liz Truss, both played fast and loose with the public finances, but also undermined the economic institutions that... have made Britain a safe and secure place to invest." (07:26)

• On Farage:

  "He does not believe in the UK being open for trade. He sides with our adversaries... He's incapable of working with others. I'm not worried about Nigel Farage." (18:39, 19:52)

• On the UK’s Approach in a Tense Global Context:

  "It is very important for the safety and security of the Western world that [the UK-US relationship] continues." (04:34)

Timestamps for Key Segments

• Opening on Trump Tariff Threats: 01:17–03:14
• Greenland, Military Cooperation, and Security: 02:23–04:26
• Global Trade, Tariffs, and UK’s Strategy: 05:55–07:15
• Central Bank Independence and Economic Stability: 07:15–08:59
• Visa Policy Announcements: 09:58–11:56
• EU Customs Union Debate: 11:56–14:51
• China Relations and Embassy Issues: 15:02–16:36
• Domestic Politics, Farage, and Labour Stability: 17:46–20:42
• Tax Policy and Fiscal Events: 21:17–22:49
• UK’s Message at Davos: 23:02–24:17

Tone and Style

Rachel Reeves speaks with measured confidence, combining technical economic detail with pragmatic, diplomatic responses. The episode balances reassurance (especially to business and investors) with firm dismissals of political distractions and clear ambition for the UK's global leadership role in trade and talent. The host maintains a probing, but neutral, journalistic tone throughout.

This summary provides a comprehensive yet accessible guide to the episode’s substance for anyone who missed the original broadcast. Timestamps and quotes help anchor the most important insights and positions from UK Chancellor Rachel Reeves.