Donald Trump, who will be sworn in as the 45th US president on Friday, said he would do a quick and “fair” trade deal with the UK in his first interview with a British newspaper, published yesterday.
“We’re going to work very hard to get it [a trade deal] done quickly and done properly. Good for both sides,” Trump told The Times.
Timeline for Brexit
- September 10, 2019
But how will a trade deal impact the UK economy and what will it mean for UK businesses?
David Collins, professor of international economic law at City Law School in London is optimistic.
No more tariffs
Taxes on goods entering a country, otherwise known as tariffs, are already low between the US and the UK, averaging at about three percent. A free trade deal could bring these tariffs all down to zero.
Despite Trump’s threats to impose a 45 percent tariff on China, Collins maintains that such a policy is not viable, and in reality any tariff will not be nearly as high as the proposed figure.
He adds that Britain will only benefit from Trump’s economic policies, because the president-elect has no intention of punishing the UK.
“The UK is not a currency manipulator, we don’t dump and we don’t really subsidise. We aren’t a target. We aren’t on Trump’s radar,” Collins told Verdict. “The UK is America’s seventh largest trading partner. Putting up tariffs against us would be a mistake.”
Greater access to the US market
Trump’s prospective economic policies also include lowering taxes and spending more on infrastructure.
The US market will prosper as a result, which will in turn benefit the UK, according to Collins.
“More Americans with more money can buy more from the UK,” he said. “British businesses and CEOs will be able to invest in an even bigger US market. There will be enormous opportunity.”
Economic prosperity without the EU
British prime minister Theresa May is due to meet Trump for the first time in the coming weeks.
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Collins argues that May will come away from the meeting with a commitment from Trump to a free trade agreement.
“Can you imagine the weight that will carry when she comes back to the UK? She will say we don’t need to worry about our country post-Brexit,” he told Verdict. “If Britain gets a free trade agreement on the same terms as we would have got as part of the EU, May can say: ‘hey look, we don’t need the EU, we can get these amazing deals.’ I can almost guarantee it.”
It is worth noting that trade negotiations are highly complex. A US-UK free trade deal could destabilise several key areas, from farming to the NHS.
Most importantly, Britain remains inside the customs union meaning it cannot yet negotiate its own comprehensive trade deals.
There may be benefits to come, but it is unlikely that any deal will be quite as quick as Trump seems to suggest.