Rachel Reeves has been criticised for saying trade with the EU is more important than with the US.
The Chancellor met her American counterpart Scott Bessent last night as part of efforts to secure a deal to save UK businesses from Donald Trump's punishing tariffs.
She has suggested the UK could lower levies on American cars from 10 per cent to 2.5 per cent in an attempt to be spared the 25 per cent rate now being imposed by the President.
But she sparked anger in an interview broadcast ahead of the meeting in Washington yesterday by suggesting improving ties with Brussels is more of a priority.
She told the BBC: 'I understand why there's so much focus on our trading relationship with the US but actually our trading relationship with Europe is arguably even more important, because they're our nearest neighbours and trading partners.
'Obviously I've been meeting Scott Bessent this week while I'm in Washington, but I've also this week met the French, the German, the Spanish, the Polish, the Swedish, the Finnish finance ministers because it is so important that we rebuild those trading relationships with our nearest neighbours in Europe, and we're going to do that in a way that is good for British jobs and British consumers.'
Tory business spokesman Andrew Griffith said: 'Going to Washington to get a trade deal only to say she views the EU as more important is a major gaffe by this foot-in-mouth Chancellor.
'The US is our single largest trading partner and the one where exporters such as British carmakers are facing acute uncertainty right now.
Rachel Reeves was criticised for saying an EU trade deal is more important than with the US
Her comments came just hours before a meeting in Washington with US Secretary of the Treasury Scott Bessent
'Once again we see a Chancellor who is out of her depth and making bad choices which could cost the UK dear.'
But the Chancellor's comments were backed by Downing Street, with a spokesman saying: 'It's a statement of fact that the EU is our largest trading partner.
'You have the Prime Minister on record saying that it's a false choice between the EU and the US; both are hugely important trading partners.'
After their talks last night Ms Reeves posted a photo of herself shaking hands with Mr Bessent on social media, writing: 'The UK-US relationship has delivered prosperity for businesses and working people on both sides of the Atlantic.'
It came as fresh figures confirmed the importance of transatlantic trade, particularly for motor manufacturers.
The Office for National Statistics (ONS) said £59.3billion worth of goods went from the UK to the US last year.
'Exports to the US accounted for 16.2 per cent of all goods exports, making them the UK's largest goods export partner,' the ONS said.
'The proportion of total goods exported to the US has increased gradually since 2022, indicating that the US may be becoming a relatively more important export partner for the UK.'
The Chancellor's meeting came as fresh figures confirmed the importance of transatlantic trade, particularly for motor manufacturers (file pic)
America was the biggest market for cars, with sales worth £9billion accounting for 27.4 per cent of all UK car exports.
And Britain imported £57.1billion of goods from America, 9.7 per cent of the total.
A leading think-tank said Britain was one of the few countries to have balanced trade with the US, which may shelter it from the higher tariffs Mr Trump wants to impose, including on the EU.
Emily Fry, of the Resolution Foundation, said: 'With the US our single largest market for car exports, the Government is right to prioritise protecting car manufacturing from US tariffs.'