Neoliberal Centrist Dad, episode 8
Why a US-UK trade deal is extremely, vanishingly unlikely
There are two sides to the debate in Britain around a trade deal with the US. The funny thing is, both of them are completely wrong. The truth is much simpler.
One side is the Brexiter right who are thrilled that Trump is going to be president again. Despite the fact that the UK moved no closer to a magical trade deal with the US during his first presidency, the Brexit bunch have their excuses for why this didn’t happen. “We didn’t leave soon enough for Trump to be able to get stuck into this. Now that we’ve left, it’s going to get over the line this time for sure.” Yes, you may have spotted it: this is another example of the Brexiter’s favourite excuse, “Brexit hasn’t worked because of Remainer meddling”.
The idea here is that Trump loves the UK in a unique manner and thus will extend the hand of friendship across the Atlantic and embrace Britain in a transformative way. We will become the quasi 51st state, all while retaining complete sovereignty (how this is meant to work in practice is the foggiest bit of this fantasy). Trump will be the thing that finally makes Brexit work. It will all be glorious, they tell us.
The other side of this debate panics about the same scenario unfolding, but painting it all negatively. We will get a trade deal with the US by lowering all of our standards, most notably on food. Chlorinated chicken will be on our supermarket shelves, choking us to death. Our farmers will all go bust because the American food industry will have such unfettered access to the British market. We’ll all be eating corn dogs and obesity will spiral out of control.
Like so much in our political debate these days, both sides are completely wrong. It’s the same thing you get everywhere else: do you want to listen to these people over here who are wrong and sometimes crazy (and perhaps even a little hateful), or do you want to listen to these people over here on the other side, who are wrong and sometimes crazy (and perhaps even a little hateful)? Here’s a good idea: don’t listen to either of them.
There are many reasons why a UK-US trade deal is 99.99% unlikely to happen, but for the sake of brevity I will focus on the biggest two.
The first is Donald Trump himself. His whole platform is extremely protectionist. He wants to impose tariffs on goods coming from anywhere in the world that he logically can impose them on. If you look at his first presidency, America went significantly backwards in terms of openness on trade. He thought NAFTA, a trade deal heavily weighted in America’s favour, wasn’t US-friendly enough and thus the much more protectionist, pro-American USMCA was created in its place.
His whole history as a personality, going back to the 1980s, was around screwing the other guy over and getting what you can for yourself. Remember Art of the Deal? That was the whole point of Trumpism, before he ever got involved in politics. And everything he has done or said since entering frontline politics suggests he believes this more than ever. Why would he change the habits of a lifetime and give the United Kingdom a trade deal that would be massively beneficial to the UK, but of little immediate good to the US? His whole platform is “America First”!
Okay, but let’s say for a moment that Trump really wants to give the UK some amazing trade deal. Something personal within him, whatever. The second reason a UK-US trade deal is very unlikely to happen is that for the deal to be any good for the UK, it would have to be utterly dissimilar to any trade deal the United States of America has ever signed with anyone, probably ever, but at the very least in the last 100 years.
The US is the most powerful economic and military behemoth in the history of humanity. It is also the size of a small continent and thus is relatively self-sufficient in terms of resources. Therefore, when it approaches trade negotiations, it throws its weight around. The American approach to trade deals is that the other country, whoever it is, will want the trade deal way more than America ever will. Therefore, they are free to outline a bunch of red lines that suit them, knowing that if the other party walks away, it’s no big deal.
In fact, that’s what usually happens. Apart from the ones with countries in their own backyard, the US has surprisingly few free trade agreements. Basically, unless you need one, like if you’re Canada or Mexico, it’s just not worth the hassle or cost. You aren’t going to get particularly great access into the American market; meanwhile, the US government holds the vast majority of the cards and can cause havoc for you at a moment’s notice.
Some might say here, “Yeah, but Starmer is desperate to ‘Make Brexit Work’. Maybe he’ll sign a terrible deal, just to have some tangible Brexit benefit to point to.” To which I’ll respond, Starmer may have his faults, but he is not Liz Truss. He isn’t going to be in a hurry to agree anything with the US unless it is going to have tangible benefits to which he can point. And given that for the US to offer such a thing would be against their entire trading history as a nation, I think the chances of it happening are minuscule in the extreme.
So, please stop worrying about chlorinated chicken on supermarket shelves. Yes, there is a non-zero chance of it happening, I have to grant you that, but a tornado blowing your house in England over during the next calendar month is probably more statistically likely. There are other, much larger things to worry about in the world right now.
On the other hand, if you’re relying on Trump and a US trade deal to validate Brexit at long last, I think you are going to end up disappointed. At some point, you will realise that Trump’s just not that into you. Certainly not enough to make US trade history for no apparent reason.
And before anyone says, “You’re just saying all this because you’re desperate for a trade deal not to happen”, I’ll nail my colours to the mast here and say that I think a US-UK trade deal, so long as it was a really good one from a British perspective, would be totally amazing. I would love for it to happen, with Trump in the White House or under any other president. Look, I’ll put it this way: if what was lost through Brexit was the ability for my daughter to work in Paris for a summer, but what was eventually gained was the ability for her to work in New York relatively easily, then I’ll take that, happily. If what was lost from Brexit was the ability to sell into most of the European continent easily, but what we gained was unique access to the American market, I would say that was worth it.
So, there you have it: I would love to see a UK-US trade deal happen - again, so long as the terms of it were great for the UK, its businesses and its people. But as I’ve explained, that simply isn’t going to happen.
Thanks for reading to the end. Please subscribe if you haven’t done so already. I’ll be back whenever something politically annoys me, which will probably be sometime soon.
What the Tories and senior Brexity types would have wet dreams about would be the ability to sell financial services freely into USA, but which is exactly what they would not give the UK in a million years. They would have no benefit for that, only losses.
There is typically 2% duty on manufactured goods going into USA, which is nominal overhead that does not stop present trade. If that does become Trump's 10%-20%, or 60% on Chinese content then that is the stuff of a trade war and a depression. We would be far better being inside the tariff wall, but far better that the trade war didn't happen as it would affect UK exports worldwide.
The last time a trade deal with discussed with U.S trade diplomats, it was a walkover for them and in such a terrible way that to get our 2% back for exporters and nothing for services, the requirements were out of a modern horror show. The U.S wanted control of NHS purchasing and other functions, so that they could avoid the bargaining from economies of scale whereby the UK buys from the cheapest supplier worldwide and screws them right down on price, to one where they buy from USA and pay the full price on everything. For most items that would quadruple the cost and in some cases many times that again. Considering the NHS is about 40% on public expenditure, that point alone is not possible without ending many free prescriptions and charging realistic high sums for them.
On food systems, the US was similarly impossibly demanding. They wanted free entry of their worst low standards foods with no standards labelling allowed, since that would be a barrier to trade, i.e some people would refuse to buy it. It includes multi chemically washed filthy chicken that does not kill the bugs, but also the use of daily antibiotics in animal feed, even the strongest ones we are supposed to keep in reserve to protect people from increasingly resistant bugs. Then there is the hormone injections that are 3-4 times as cost effective at growing meat than from feed. I once met a Californian man in his late 20's who had to stop eating U.S beef because he was growing unnaturally tall and broad from it. The feed lot system in America and Australia is incredibly unsustainable even before you factor in air miles.
What effect would cheap commodity meats have in hitting the UK market. It would go into nearly all the factory processing, fast food, supermarket offers & canteens in institutions. UK farming would be hammered and unable to compete. Where it tried to compete, our UK standards would plummet. Farm businesses would close, rural areas blighted, farms overgrown and not looking as tourists would want to see the land, nor walkers walk on it. Meanwhile what would the UK do in any crisis about feeding itself if nowhere near even 50% self sufficient?
None of this is in UK interests, financially, health wise, on the environment, strategically or politically. Any future right wing brexity UK government enacting it would be writing it's own permanent party death warrant.
But Trump loves the UK and would treat it better? No, the strongest U.S. lobbyists with the most influence and political donations are from fossil fuels, military, plus big Pharma and farming. Obama was right. The UK was and still is at the back of a queue and that queue is impossible and endless.
Great piece up until the end. I don’t want a trade deal with a country which will prevent one with our nearest trading bloc. Number one issue globally right now MUST be the environment, especially given Trump’s attitude to destroying it. I have two sons and I want them both to have a planet at all!