Why we won’t get better trade deals out of Trump or the EU

This week Rachel Reeves will use her Mansion House speech in the City of London to “promote free and open trade between nations”. The word is that the chancellor is “expected to be clear that she will take the fight to Washington in defence of free trade”.

With Donald Trump having just seen one female progressive politician off so recently, Reeves is displaying considerable pluck in squaring up to the nascent Maga administration. Perhaps, some such as Kemi Badenoch argue, Reeves should instead take the opportunity to seize the most valuable of Brexit opportunities, and press president-elect Trump for the free trade deal with the United States we’ve been yearning for ever since that fateful referendum eight and a half years ago.

The question is: would Donald Trump ever give us a deal that would be of any benefit to the UK anyway? There are strong reasons to suppose he would not, with the worst-case scenario being that he’d force one on Britain that would actually leave us far worse off.

As with so much that will unfold during Trump 2.0, we’ve got the experience of Trump 1.0 to go on: a chaotic rehearsal for what will be a more organised and determined sequel. Answering the increasingly desperate pleas of Theresa May and Boris Johnson after the EU referendum, the Americans agreed to talks.

By 2019, the outlines of a deal were actually becoming clearer. Indeed, a draft text of such an agreement was leaked, and it ended up being used by the then Labour leader, Jeremy Corbyn, in one of his few successful assaults on the Tories in that year’s general election. “Our NHS is not for sale”, cried Jezza, and for once he had something to back up the fearmongering.

There was a risk that the UK would concede the longstanding demands of American pharmaceutical companies for longer patent protections and higher prices for their medicines, which would mean much higher drugs bills for the hard-pressed health service. Arguably less concerning were the American health giants wanting to run NHS services, hospitals and surgeries, for a suitably healthy financial return. However realistic these discussions were, they had to be immediately disowned by Johnson and his trade secretary, Liz Truss, as unacceptable.

Much the same goes for the Americans’ insistence on different – most would say lower – standards in food safety and production. They would mean relaxations in UK regulations regarding food, drink and finished products when they relate to pesticides, genetically modified organisms (GMO), and hormone-treated livestock and poultry. Then there’s artificial colourings and flavourings, sanitary standards and welfare, and non-discriminatory food labelling (so “Made in the United States” and “contains GMO” aren’t signals to leave the stuff on the shelves).

You may recall our old friend the chlorinated chicken. Unlike in the UK and the rest of Europe, poultry in the US may be kept in such an intensive, unnatural environment that they require washing with chlorinated water before being ready for human consumption. The Americans don’t seem to mind, and eat plenty of KFC without keeling over, but on this side of the Atlantic, the chlorinated chicken became a symbol of everything wrong with American industrialised food production.

Also unpopular were hormone-treated beef, GMO wheat and corn that would find its way into every crevice of the food chain, and an almost luminescent colouring for fizzy drinks that’s a by-product of refining petrochemicals. Eeeurgh!

So the British said “no thanks” to all that, and matters went a bit sour when the Trump administration, in another protectionist spat with Europe, slapped tariffs on British steel and aluminium exports to the US. The British retaliated with import taxes on bourbon and Harley Davidson motorbikes (eventually relaxed during the Biden administration).

So, yes, actually we can have a free trade deal with America – provided it is very much on their terms. And they are worsening …

In the new world of Trump 2.0, we find vice-president-elect JD Vance suggesting that the Americans would drop support for Nato if Europeans (and potentially also the British) tried to regulate Elon Musk’s X network and other US-based social media – meaning changes to Britain’s laws on hate speech, online harm and elections. The UK would also be under pressure to speed up the adoption of Musk’s driverless electric cars, while the White House might also like it if we joined in with any punitive tariffs and quotas on China (driving up British inflation).

Another piece of leverage would be to withdraw intelligence cooperation – sharing secrets – and nuclear defence technology from the UK. Trump has no qualms about mixing foreign, defence and trade policy. He’s a transactional guy, after all, and for all his sentimentality about his Scottish roots and the royal family, the deal is his thing. And, of course, the Americans would insist the British get on with increasing their defence spending.

Or else? Tariffs on British exports that would halve our growth prospects in the coming years, as well as saddling the NHS with a huge drugs bill, and consumers with unsavoury food – not to mention the damage to farmers unable to compete with American producers – a far bigger threat than the introduction of inheritance tax on farms. At the end of it all, the tidy £40bn a year trade surplus the UK runs with the US would be greatly reduced.

Most awkwardly of all for Keir Starmer, a US-UK free trade agreement of the kind that Trump would bully us into taking would end Labour’s ambition to “reset” Brexit. We might wonder, for example, how the French, Italians and Spanish might react to Californian wines flowing into the British market on advantageous terms. Anything made with GMO wheat, even an innocuous chocolate Hob Nob, would be banned in Europe under strict EU regulations.

As former UK trade official John Alty, a senior adviser at Pagefield consultants, explains: “If there were a US-UK FTA which allowed imports of chlorinated chicken and hormone-treated beef, that would certainly make it impossible for the UK to achieve the objective of reducing food safety border checks with the EU on meat products and probably agriculture as a whole, as the EU would not allow them into the EU”.

Indeed so, but if the Trump White House decides to follow the principles outlined in his Art of the Deal, the British may end up with the worst of both worlds – a rotten, one-sided free trade deal with the Americans, and a flawed deal with the EU we can’t renegotiate.

Sounds painful, and it will be. So much for “taking back control” and restoring sovereignty and the boundless benefits of “free trade” with much larger and more powerful economies. We should be careful what we wish for.