Deal or No Deal: A UK and US mini trade deal on the horizon?

December 31, 2020

2 min read

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What's going on here?

In the last month of his presidency, President Trump and his administration are in talks with the UK to secure a mini trade deal.

What does this mean?

The mini trade deal is looking at negotiations and compromises between the two countries, according to Robert Lighthizer, The US Trade Representative. This includes the US gaining additional access to the agricultural market in the UK, and removing hefty tariffs imposed on goods such as Scotch whisky, previously subject to a 25% tariff.  Talks of this trade deal come after the news that the UK has broken its support of the EU’s side in the Airbus-Boeing trade dispute. The UK has announced it will no longer apply tariffs to imports on Boeing aircraft. Liz Truss, the UK’s Secretary of State for International Trade, has stated she wanted to “de-escalate” this 16-year ongoing conflict over subsidies.

What's the big picture effect?

The Airbus-Boeing dispute sprung from the EU and the US claiming that each other’s aeroplane manufacturers were unfairly subsidised. The US first filed a case with the World Trade Organization in 2006 which claimed that the EU company Airbus had received $22bn in illegal subsidies. The EU retaliated with a claim alleging that the US company Boeing had received $23bn in “trade-distorting” subsidies.

UK ministers hope a trade deal will bring the US towards a reasonable settlement over the Airbus-Boeing row, and believe some form of a deal could demonstrate that the UK is serious about reaching a negotiated outcome. But how likely is a mini trade deal at this point? Time is ticking away before Biden steps into office in January, and the contrast between the Trump and Biden administrations could mean change for UK-US trade relations.

Trump has talked up a trade deal between the UK and US, claiming a “special relationship” between the two countries would put the UK at the “front of the queue”. But Biden has voiced his opinions on Brexit being “not his preferred outcome”, and a few years ago expressed that US interests in the UK had diminished following Brexit. It looks likely that the US will be searching for trade deals elsewhere. Biden will look to restore closer trade relations with traditional partners such as the EU and Canada and Vice President-elect Kamala Harris has signalled interest in other areas of the globe such as Japan. The UK could find itself “very low down the pecking order in terms of trade agreements”, according to Jason Langrish, executive director of the Canada Europe Roundtable for Business. In Langrish’s view, Biden will prioritise a trade deal with the EU and a reset of US-China relations over the prospect of a trade deal with the UK.

Finally comes the issue of time. With Trump leaving office on 20th January 2021, a US-UK trade deal will not be a priority in these final weeks of the Trump Presidency. Johnson needs to hope that UK negotiators, straight off the back of negotiating the Brexit deal, are met with open arms in Washington early next year.

Report written by Hannah Parker

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