What will a Trump White House mean for Britain’s global trade ambitions?
Though few voice it so crudely, one of the great worries on the minds of British policymakers is whether the soon-to-be-reincarnated President Trump will slap tariffs on UK exports to the United States. The more romantically inclined, preferring to ignore Donald Trump 's record and harsh anti-trade rhetoric, might still wonder if that ever-so-elusive UK-US free trade agreement (FTA) might even, maybe, somehow, be in the offing in the coming years, provided Keir Starmer lays the flattery on with a trowel.
For those companies who provide Range Rovers, Scotch, and financial services to the US, the issue is obviously vital; but given that America is Britain's largest trade partner after the European Union, transatlantic trade will affect the whole economy. Key fact: exports to the US account for about 6 per cent of UK GDP. Is a " special relationship " in trade a good idea, or even possible?
Is trade a good thing?
On the whole, yes, and that is well underpinned by economic theory along with experience during the post-Second World War era, when general reductions in tariffs, non-tariff barriers and import quotas have helped to boost global growth, most notably as China rejoined the world economy earlier this century.
Trump, however, doesn't agree. That's the fundamental problem. According to Bob Woodward's excellent book on Trump's first term, titled Fear, the president was once handed a draft text on his way to a G20 conference, and he scrawled the words "TRADE IS BAD" on it. He says "tariff" is his favourite word, and ideally he'd like to replace income taxes with tariffs (a highly regressive move, but there you go).
For Trump, tariffs aren't just a weapon to be used to apply diplomatic pressure, or a way to raise tax revenues, but a good thing in themselves to promote reindustrialisation and bring manufacturing jobs back to the US – promises that helped him win the elections in 2016 and 2024.
Will Trump make an exception for the UK?
Post-Brexit, it is practically possible for the UK to sidestep a trade war between the US and the EU, and even for Trump to grant certain trade privileges to Britain. It would mean violating the "most favoured nation" rule of the World Trade Organisation, but that won't bother Trump.
On the positive side, it's said that Trump is a "Britophile", on the grounds that his mum was Scottish, he has his golf course at Turnberry in Ayrshire, and he kept a bust of Winston Churchill in the Oval Office. When he came to meet the Queen a few years ago, he was embarrassingly effusive. He will also have noted that the UK is one of the few European Nato partners to make much effort to "pay its bills" for the American defence umbrella.
On the other hand, we also know that Trump is unsentimental and ruthless, and would drive a hard bargain. When he was last in the White House, he happily taxed UK steel and aluminium exports; the UK retaliated by ramping up taxes on Bourbon whiskey and Harley-Davidson bikes. Also, if a full-on formal trade treaty were to be signed by Trump, it would have to be ratified by the Senate, where hardline protectionism is a given across both parties.
So what would help?
Despite his ceaseless attempts to act as a "go-between" for Keir Starmer and Trump, it seems improbable that Nigel Farage would have the skills, knowledge, or influence with either leader to ensure success. Besides, Trump seems to get on with Starmer fine. A free trade deal with the US was dangled in front of the voters by Farage in the 2016 referendum as a Brexit benefit, so Farage has a special interest in getting a deal done, but Trump didn't show that much interest in a US-UK FTA during his first term in office, and neither did Joe Biden during his.
Protectionism is one of the few things Democrats and Republicans agree on. As a matter of fact, Trump quite enjoys pulling out of treaties rather than making them – the North American Free Trade Agreement, the Paris climate change accords and the Iranian nuclear deal being obvious examples.
Realistically, trade with Britain is never going to be a priority for any US administration, and still less for Congress. By the same token, an apology from David Lammy for his disobliging remarks in the past, or even replacing him as foreign secretary, wouldn't make any real difference to the economic and diplomatic realities. Trump is all about the art of the deal, and he's not too fussy about who with, if he judges it advantageous to his interests.
What's most likely to happen?
Some minor changes to tariffs in the context of a US trade war with China, and continuing trade disputes with the European Union – which objects to US subsidies for "green" industries. Given that the UK runs a fairly healthy trade surplus with the US, a free trade deal, at least in the short term, may not be such a great idea anyway – and it would face opposition in the UK, too.
If the past, rather cursory discussions about an FTA are anything to go by, the US would demand free and fair access to lucrative contracts to provide drugs and provision of services with and within the NHS – an idea that has proved anathema to the British. It might well also complicate attempts to "reset" relations with the EU – an endeavour that is arguably even more critical with an isolationist about to be reinstalled in the White House.
Like those other tempting Brexit chimeras of FTAs with China and India, the UK-US trade pact looks further away than ever. When, back in 2016, the then president Barack Obama warned the UK that we'd be at the back of the queue for a deal, he knew what he was on about.
