Let’s not be naïve – Trump has the upper hand over Theresa May in trade negotiations

The first is that America will put America first. The harsh message from the President does at least have the virtue of clarity


This week the new American administration will start work on a trade deal with the UK, to be implemented when Britain leaves the European Union. It is a welcome move, for any trade deal should increase the wealth and welfare of both partners, just as any trade restriction is likely to cut them. The US is already Britain’s largest trading partner, larger than Germany, although overall trade with the EU is obviously much larger still. It is true too that trade with the US is in broad balance, while trade with the rest of the EU is in large deficit.

This deal will be part of a wider realignment of UK relations. We will catch more of a feeling for that after the visit of Theresa May to Washington later this week. Trade will be only one aspect of her discussions with the new President, but it is an important aspect and, whatever view one takes of Donald Trump, a close relationship with the US is helpful to the world. The UK will always remain a junior partner, but at the margin will have some influence on US policy, not just towards Europe but more generally towards the world beyond.

However, in going into these negotiations the UK team should remember three things. The first is that America will put America first. The harsh message from the President does at least have the virtue of clarity. We know where we stand. There will be a deal, and that will benefit both sides. But it would be naïve not to accept which side has the stronger hand.

The second is that there is no easy transformation of economic relations in store. Distance matters less than it used to, but it is not dead. The trucks and trains will still be bringing stuff across the Channel. European supply chains are so integrated that, while as a proportion of the total our trade with the EU has been falling for more than a decade, Europe will remain our largest overall trading partner for some years to come. Trade deals with the US and the rest of the world are welcome, but do not replace trade with Europe. We need a deal there too.

And the third point is the UK is useful to the US in part because of our relationship with Europe. The greater the rift with Europe, the less use Britain is to America. That is not just an issue about trade, although in financial services in particular, London has been the base for many American banks to enter the EU market. It is the wider issue, the extent to which Britain has been able to nudge Europe in a direction that broadly supports our mutual interests. Under many different US administrations and many different UK governments there have been common objectives for the European continent as a whole. But outside the EU it will be harder for the UK to achieve those. We will have less leverage, maybe much less.

There will inevitably be a huge amount of attention paid to the choreography of the meeting between Donald Trump and Theresa May, just as there has over the handover of power in the US over the past three days. But we should be neither dismayed nor seduced by the details. What matters is that this quite new Prime Minister and this very new President have a businesslike working relationship. These are not going to be an easy few years, for obvious reasons. But a solid relationship between the UK and the US is in the interests of everyone, including the continent of Europe.


Sources :/www.independent.co.uk

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