Will a UK-US free Trade Deal Happen Under Trump’s Second Term?

   

Will a UK-US free Trade Deal Happen Under Trump’s Second Term?

With Donald Trump set to return to the White House in January, a lot of people are wondering whether the UK could finally strike a trade deal with the US. After all, the two countries have a long history of trading with each other, and there’s been talk for years about making that relationship even stronger. But as Trump gears up for a second term, there’s a lot of uncertainty about what a deal might look like and if it will even happen.

The Argument for a UK-US Trade Deal

Let’s start with the basics. The UK and the US are huge trading partners. In 2023, the UK exported nearly £187 billion in goods and services to the US, and despite some ups and downs in global trade, the UK consistently runs a trade surplus with America. So, for a lot of UK business leaders, a free trade deal with the US seems like a no-brainer.

Stephen Moore, one of Trump’s senior economic advisers, recently said that if the UK is open to embracing the “economic freedom” that Trump champions, a trade deal could be on the horizon. Essentially, Moore is suggesting that the UK could benefit by loosening up regulations and letting the market drive economic growth, much like the US does.

This could be great news for businesses that are eager to see less red tape and more opportunities for exports. After all, the US is already the UK's biggest single-nation trading partner, and a deal could boost those numbers even further.

But Is It the Right Move for the UK?

Not everyone agrees, though. Some people think the UK should stick with Europe when it comes to trade and not get too cozy with Trump’s America. Pascal Lamy, a former World Trade Organization chief, argues that the UK’s economic future is better served by strengthening ties with the EU rather than seeking a trade deal with a potentially protectionist US.

Lamy points out that the UK’s trade relationship with the EU is three times larger than its trade with the US. So, for anyone who’s concerned about the long-term stability of the UK’s economy, a strong relationship with Europe might make more sense than banking on a deal with the US, especially with Trump back in charge.

What Are UK Business Leaders Saying?

Here’s where it gets interesting: UK business executives aren’t exactly thrilled with how things are shaping up. The UK government just introduced a budget that includes £40 billion in tax increases the largest in three decades. Many business leaders are worried this could mean higher costs, fewer jobs, and slower growth. And if Trump decides to impose hefty tariffs on UK goods, things could get even worse.

Economists are already predicting that the UK could lose out on up to £22 billion in exports if Trump follows through with a 20% tariff. That’s a big hit to an economy that’s already dealing with a lot of challenges.

So, it’s not surprising that many UK business execs are calling on Prime Minister Keir Starmer to ramp up diplomatic efforts with the incoming Trump administration. They want to avoid a trade war, and they’re hoping that a UK-US trade deal could offer a way forward.

Key Figures Who Could Make It Happen

Navigating all of this will likely fall to a few key political figures. One of the most important could be Peter Mandelson, who is expected to be named the UK’s new ambassador to the US. Mandelson, who’s no stranger to high-level trade negotiations, is known for being pro-EU but has also spoken about the benefits of a UK-US trade deal. His experience and connections in both Washington and Brussels could help smooth over any bumps in the road.

On the other side of the political spectrum, Kemi Badenoch, the new Conservative opposition leader, has been pushing for a UK-US trade agreement as well. Badenoch has argued that it’s time for the UK to strike a deal with Washington, especially if Trump decides to ramp up tariffs. She’s even suggested that the groundwork for a deal was laid during Trump’s first term, and it could be revived when he returns to office.

So, Will It Happen?

The truth is, we don’t know. A UK-US trade deal could be a huge win for both sides, but there are a lot of hurdles to clear. From the potential for tariffs to the political tensions in both countries, this deal is far from a sure thing. But with some experienced diplomats like Mandelson and Badenoch pushing for it, there’s a chance that the UK and the US could finally strike a deal that benefits everyone.

The next few months will be critical, as both countries try to figure out how best to move forward. Will the UK double down on its relationship with the US, or will it focus on rebuilding ties with Europe? Either way, it’s clear that a lot is at stake, and the decisions made now will have a long-lasting impact.