The UK has risked a fresh row with America after Chancellor Philip Hammond attacked Donald Trump’s tax cuts.
Hammond has sided with four other European treasury ministers to warn the US President’s massive tax overhaul could spark a trade war.
In a letter to US Secretary of the Treasury Steven Mnuchin, the Chancellor joined finance ministers from Germany, France, Italy and Spain to say they had “significant concerns” about three tax initiatives that could have “a major distortive impact on international trade”.
EU nations have long expressed fears the reforms might hurt world trade and European companies in particular if international agreements are flouted.
The letter warns World Trade Organisation rules and America’s own tax guidelines are being undermined by the plan.
“The inclusion of certain less conventional international tax provisions could contravene the US’s double taxation treaties and may risk having a major distortive impact on international trade,” the five wrote.
Hammond’s decision to sign the letter comes after rows between Theresa May and Donald Trump over the President’s decision to recognise Jerusalem as the capital of Israel, and re-tweeting videos of far-right group Britain First.
Meanwhile, the UK is also keen on a big UK-US post-Brexit trade deal.
If passed, the tax reforms would be Trump’s first major legislative accomplishment in nearly 11 months in office.
His measures would cut taxes by about $1.5 trillion over the next decade while adding billions to the $20 trillion deficit, combining steep tax cuts for corporations with more modest reductions for most individuals.
Together, the changes would amount to the biggest overhaul of the US tax system in 30 years, touching every corner of society.