Trump Should Broker US-UK Trade Deal – Shock EU Leadership

Wild things are happening in Great Britain – and they might affect average Americans. Put all this Brexit fandango to one side.  An opportunity could be emerging for the United States to negotiate a unique, once-in-a-generation trade deal with the United Kingdom.  Such a deal – negotiated ahead of Brexit – might be the missing piece, allowing conservative UK leadership to play the Trump card and escape an unyielding European Union (EU).

If this scenario played out – over the next five months – the outcome could boost imports and exports for both countries, reduce Chinese influence in the UK, accelerate stability post-Brexit jobs, and dramatically elevate revenue and jobs for US farmers, car, aircraft and computer makers, manufacturing and services.  

In short, if a US-UK deal were inked within that period, newly reasserted British freedom might be beneficial to both the US and UK.  Such a deal would reaffirm the long-standing “special relationship” America and Great Britain have had.  It all depends on the facts and political will.

Here are the key facts.

The backdrop is set.  The EU has been reluctant to allow Britons to leave on terms many Britons voted for and still want.  As the Financial Times reported last week: “Britain will remain as a member state of the EU until 31 October, with the option to leave earlier if Theresa May can secure Commons support for the Brexit deal, after a Franco-German carve-up of the UK’s future.”

In short, Britain has little leverage with the EU at the moment.  This impasse has flummoxed – and annoyed – many in the British Parliament. Successive attempts to vote their way out stumbled on uncertainties about their economic future.

EU leadership has hardly been gracious about managing the desired exit; their approach has been relentlessly unhelpful and repeatedly high-handed.  Now, after “a six-hour debate among the EU leaders” last week, they offered an extension to October.  The European Council President figuratively kicked the UK Prime Minister on the way out, adding “do not waste this time.” 

In other words, as the EU leadership sees it, Britain needs – and owes –them more than Great Britain needs or owes the EU.  But is that right? Really so?  Maybe not. 

Consider trade balances first – between the UK and Europe, and then between the EU and US, and UK and US.  This stuff matters. 

If the UK could craft a trade deal with the US that gave UK leaders the votes needed to exit, then EU antagonists might find themselves in a different position.  More, such a deal might actually strengthen the US hand in dealing with several intransigent EU members later. 

Here are numbers that matter.  The US is the UK’s top export destination, followed closely by Germany, Netherlands and France.  Certainly, with incentives that lowered prices on UK goods, Americans might buy more from the UK, less from others.  The UK sells cars, medicines, turbines, and things we need.  Why not buy more from them, less from others?

At the same time, Great Britain buys from Germany and France many cars, parts, medicines, planes, and energy.  Why not buy those commodities – and discounted services – from the US? 

Today, the UK has a negative trade balance with nearly double imports to exports.  We could help them re-balance, while helping US producers, farmers, manufacturers and service providers. If the EU wants to punish UK producers and consumers, why not craft a near-term way to fill that gap, offer proportionate advantages – and reset the dial with increased transatlantic trade with the UK?

Notably, UK trade with non-EU countries is already rising, although China is a major beneficiary.  Why not have US gain that non-EU market?  Currently, the EU sells more to the UK than the UK sells to the EU, but if the UK pivoted to the US, this might incentivize EU countries to improve trading terms with the UK also – far beyond Brexit.

Bottom line:  The UK is “caught in irons,” wanting out of the EU but not sure how to get there.  They are looking for something to break the impasse in the UK Parliament, incentivizing a majority to make this definitive move back toward uncompromised British sovereignty, escaping the increasingly arrogant and intransigent EU leadership.  A newly empowering, anticipatory US-UK trade deal might help them get over the line.

Long-term effects?  Such a deal would create new jobs, new relationships, and new revenue for US and UK businesses, lower prices for consumers and businesses in both countries, suddenly make EU leaders rethink trade treatment of both the US and UK, strengthen the “special relationship” between our countries, and prove – once again – that President Trump is ahead of the curve, helping common wage-earners and American business get ahead.