A Prime Minister trying to build strong relations with Europe while keeping America on side. A Chancellor hoping to boost the economy through stronger, freer trade with both blocs.
“Plus ça change,” as our cousins across the channel might say.
The difference now is that these negotiations are taking place against a backdrop of a tariff war triggered by the US.
New world order: protectionist America
Where traditionally it would have been the EU that was seen as the more protectionist bloc, roles are now reversed courtesy of a newly protectionist Trump-led America.
And you don’t need to be a Brexiteer to note the irony of a Labour Government using the greater autonomy over trade policy – granted by Brexit – to carve out advantageous tariffs with the US.
So, what are Keir Starmer and Rachel Reeves aiming to achieve from the current round of negotiations? And what can realistically be expected as outcomes?
UK aim: get US trade back to where it was pre-tariffs
Firstly, the reality is that even with a new trade agreement with the US there will be no big win. The wider tariff wars will still have a knock-on impact on the UK, and even with a UK-US deal it will largely just reset the trade position to where it was before Trump’s higher tariffs were implemented.
The main thing Rachel Reeves is aiming to secure from her trip to the US is a cut in tariffs on cars and steel. Any additional measures to protect pharmaceutical exports or reduce the standard 10% tariff would now be seen as a bonus.
Car exports to the US are worth £6.4 billion a year to the UK, forming a critical part of the West Midlands economy, where thousands of jobs rely on automotive giants like Jaguar Land Rover.
Quid pro quo
For their part, the Americans want the UK to cut taxes on US cars and technology companies, and to relax restrictions on food imports – although, for reasons including public acceptance, chlorinated chicken remains off the menu.
On the European negotiations, Keir Starmer is looking to smooth the process for agricultural exports to the EU and able access for UK firms to the EU’s new €150 billion defence fund.
In exchange the EU is looking for guaranteed fishing rights in UK waters, greater alignment to European food standards and some form of youth mobility scheme.
UK – “best of both worlds”
Not for the first time, the UK is looking to position itself as the gateway between Europe and America – and carve out a niche that attracts investors to a “best of both worlds” market.
