James Arnell is a partner at Charterhouse. He writes in a personal capacity.
I disagree with most commentators who believe that the UK will get a raw deal in any US-UK trade negotiations after Brexit.
I do not underestimate the fickleness of Trump, nor the Irish-American lobby in Congress. I recognise the overwhelming weight of the US relative to the UK. I know that the US looks after its interests and does no one any favours.
But I don’t think any of that will stop us agreeing a decent trade deal. I believe that the US has major strategic interests in a trade deal with the UK, and that it will decide not to use all the undeniable leverage it has to strike the toughest possible terms. It will want to strike a fair deal.
The US is in “America First” mode. Contrary to what most people seem to believe, I believe that means Trump, and the American people, wish to see a global trading system which it sees as fair from its perspective. There are many senior American business people who believe that the renegotiation of NAFTA was long overdue, and who are throughly fed up with the uneven playing field between the US and China.
Yes, they worry about the effects of the US-China trade war on the US economy, but many of them believe that some fights just have to be had. There is more patriotism in American business and much more business support for Trump’s China line than the media presents.
The opportunity to strike a trade deal with a long-term ally like the UK is timely. Agreeing an even-handed trade deal sends a strong message: this is about fairness, not American economic bullying. I am optimistic that the US, across the political spectrum, will support a fair deal with the UK, because I think that it has a very strong interest in sending that message.
And that is not all.
A thriving UK, in a comprehensive free trade relationship with the US, right on the periphery of the EU, will put massive pressure on it. Other EU countries, fed up with the federal agenda of the EU, will look at the UK and wonder whether they too might be better free and able to strike their own trade relationships. This threat to the EU will be eyed by the US as great leverage to force the EU into what the US would see as a fair trade deal. They will want the UK to succeed in its deal with the US. They won’t want to screw us – because that would make it far too easy for the EU to keep its trade barriers up.
The US’ leverage is greater if any UK-US trade deal is designed to be as close as possible to something the EU could, should and, ultimately, would accept. There is no leverage in agreeing a deal which does not work for the UK and which certainly would not work for the EU, and the smart money in the US will know it.
Aside from its desire to show an openness to trade with partners who do not play the US for fools, and its desire to pressurise the EU, the US will also welcome a committed ally in the global struggle for a new trade order, binding the three big blocs (US, China, Europe) into a more open, more level world trade regime or, at least, binding the rest of the world into a trading system around an unreformed China. That is the best chance of America remaining “First”.
At present, we are in the phase of pulling down the old system, which the US sees as rotten and against its own interests. We should not confuse that with isolationism. My firm belief is that the US will relish the opportunity to show the world what its new order should look like, by agreeing a sensible deal with the UK.