Explainer: What could a UK-US trade deal look like?
US President Donald Trump is expected to impose new tariffs on imports from countries around the world this week, with the UK set to be affected by the global tax changes.
No10 has confirmed the government is “actively preparing for all eventualities” ahead of Trump’s announcement on April 2, and that we “expect the UK to be impacted”.
However, trade negotiators are still holding “constructive discussions to agree a UK-US economic prosperity deal”, the Prime Minister’s official spokesman stressed.
While a deal may not be on the cards ahead of Wednesday – which Trump has dubbed ‘Liberation Day’ – what could some of the key areas for a future UK-US trade deal be?
What does the UK want on trade?
Negotiations on a US free trade deal – seen as the jewel in the crown of a post-Brexit Britain – have gone on for some years, but are yet to come to fruition.
Speaking last week, business and trade secretary Jonathan Reynolds stressed the government “would not have wanted any tariffs applied to the UK while we’re having this conversation” before admitting “we’re pretty close to what the US calls ‘world tariffs day’”.
Key issues for the UK throughout the negotiations have included food standards and NHS acting as sticking points.
But when it comes to the NHS, Marco Forgione, director-general of the Chartered Institute of Export & International Trade (CIEIT) stressed: “The complexities around that would take it outside of the possibility of inclusion in a trade agreement – or arrangement – now.”
He suggested issues such as US access to the UK pharmaceuticals and health insurance markets “would sit outside of the conversations taking place right now”.
And on food standards, he added that the government has “stood firm” including on chlorine-washed chicken and hormone-treated beef.
While Chris Southworth, secretary-general of the International Chamber of Commerce UK, is calling on the government to adopt a trade plan that he argues could “unlock £250bn to £270bn in growth and efficiency savings and productivity benefits”.
He called for a “modern digital economy agreement, which is much more friendly and agile for a services economy like the UK and the US, and possibly even bolt in a finance and investment deal in behind that”.
What does the US want in return?
Forgione suggested the US administration hopes to see a “clear sense of impact from their tariffs”, with a focus on Trump “delivering on his America First agenda”.
But he indicated despite the limited chances of securing a deal prior to tariffs being implemented, he does believe “there is a clear opportunity that very soon afterwards we could seal an agreement with the US”.
Key areas, he told City PM, could include the automotive and aerospace sectors; services trade and mutual recognition, as well as a simplification of access for insurance and finance.
“There is an appetite in Washington for a trade agreement to be reached,” he added.
But one key ask from the US is for “some movement, adjustment, to the digital services tax”, which he said is “a reality… that will be up for conversation as part of this negotiation”.
It’s been widely reported that abolishing or reducing the digital services tax (DST) on big US tech firms, including social media companies, search engines and online marketplaces, is being considered as part of the negotiations.
The Prime Minister’s official spokesman insisted earlier today the UK “will only do a deal which reflects this government’s mandate to deliver economic stability for the British people, and we will only act in the national interest”.