How Might Businesses Concerned with Transatlantic Trade Be Affected By Britain’s Future Trade Deals with the US?

Businesses on both sides of the Atlantic have a lot to think about when it comes to the prospect of Brexit. As a member of the EU, Britain has the same trade agreements with the rest of the world as the union itself, but after the Brexit process completes in 2019 (barring any changes between now and then), Britain will be free to seek out new trade deals with other countries.

Trump and Brexit

It had been anticipated since the election of Donald Trump in the US that a post-Brexit Britain would be on a fast track to a tariff free trade deal with America – something that would be hugely desirable for businesses on both sides and a big win for PM Theresa May. Trump was a politician who expressed a pro-Brexit sentiment when the referendum took place despite most other world leaders being against Brexit. Where the previous US president Barack Obama warned that should Britain leave the EU they would be placed ‘at the back of the queue’ for a US trade deal, it seemed that the otherwise highly protectionist president Trump felt tariff free trade between the two nations would be beneficial.

Trump and Merkel

However, in recent negotiations with Germany, it seems Trump may well have been persuaded that setting up a trade deal with the EU as a whole could be a higher priority than one with Britain. It has been reported that Trump has on several occasions tried to discuss a trade deal with Germany with Angela Merkel, who replied that this was not a possibility and that a deal would need to be made with the EU as a union. Germany, of course, has a very pro-EU leadership and Merkel is considered one of the EU’s most powerful representatives. While this could be put into question in the German elections, at present Germany is in a very strong position to convince Trump of the advantages of an EU trade deal, and it seems he emerged from these conversations persuaded that such a deal could be easier than he had previously thought.

Britain Further Down the List

Should a trade deal between Trump and the EU go ahead, this would mean that the EU could beat Britain to such a deal, considering that even if the process is fast, the UK can’t begin looking for individual agreements until it has completed leaving the EU in two years. This pushes Britain further down the list of potential trade partners for the US, and also in a sense nullifies the argument that leaving the EU could lead to better trade conditions for the UK with America.

What Could This Mean for Businesses

Britain and the US are of course heavily tied, with many companies on the UK’s main share indices earning dollars, and suffering price drops even when the pound strengthens against the dollar – you can see these effects by looking at prices on trading sites like ETX Capital. This dependency is, of course, largely down to the shared language. A strong US trade deal will benefit companies who do business in both countries, However, EU countries may be able to compete with Britain for US business if they get a tariff free trade deal, considering that some remaining EU countries like Ireland also speak English, and almost all are used to English language business activities.

An EU-US trade deal may not impact whether Britain will ultimately get tariff free trade with the US, however if the EU gains theirs first and seeks to compete with Britain for American business, this could present challenges to UK companies.