Scottish whisky makers have discovered the exhausting means {that a} commerce struggle will be pricey. Sales took a £500m hit after the business was caught within the crossfire of a spat between the EU and US in 2019 when Donald Trump was final within the White House.
His re-election will undoubtedly be sending chills down distillers’ spines. Trump has threatened to impose blanket tariffs of 10pc to 20pc on all abroad imports, turning the warmth up much more on China with a 60pc levy.
Yet as Trump prepares to reignite his commerce struggle, there are hopes that this time issues is perhaps totally different for Britain.
“We have confidence that the fundamentals of the trading relationship are still very strong,” says William Bain, head of commerce coverage on the British Chambers of Commerce (BCC) and a former Labour MP below Ed Miliband.
Unlike in 2019, when Scotch turned an harmless casualty in a row over aerospace subsidies, Britain is not within the EU. While the nation had voted to depart in 2016, it had but to formally exit.
“If the US were to apply a blanket tariff on the whole of Europe, [Trump] would essentially be uniting the UK and the EU in a common cause against the US,” says Kallum Pickering, the chief economist at funding financial institution Peel Hunt.
“It would probably suit him to keep the UK onside and apply different trade policies to the UK versus the EU.”
“What is the special relationship?” says David Henig, the UK director of the European Centre For International Political Economy. “There are a lot of people on both sides who want this to work and between them we’ll usually find a way. We’ll be alright.”
David Lammy, the Foreign Secretary, has mentioned that he would search to dealer a deal. He informed the BBC’s Newscast: “Of course, we would seek with a new administration to ensure that as a major ally we were aligned and we were considered, obviously. That’s in Britain’s national interest. Of course we do that.
“We will seek to ensure and to get across to the United States, and I believe that they would understand this, that hurting your closest allies cannot be in your medium or long-term interests, whatever the pursuit of public policy in relation to some of the problems posed by China.”
The UK is in a powerful place to barter, says Bain, who was a member of the Commons’ enterprise, innovation and expertise committee whereas an Opposition MP.
“We have burgeoning trade – particularly in terms of services,” he says. “Bilateral trade is £304bn per year. That’s growing. Our services export growth is very strong. In terms of goods, nearly £62bn per annum of UK goods are sent to the US.
“The other thing to remember is that the US is the largest inward investor into the UK. There’s about £700bn-odd in investment stock from the US, which is held in the UK. You can see the enduring strength of that economic and investment trading relationship – whatever the political leadership is in Washington.
“There is a strong case for keeping tariffs as low as we can,” he says.
Pickering additionally notes that half of the UK’s exports are made up of providers, that are very exhausting to position tariffs on and unlikely to be focused.
“I don’t think it’s clear that the UK will be facing serious risks,” Pickering says. “That’s what the market is telling you.”
Sterling has strengthened by 0.8pc towards the euro because it turned clear Trump had gained. Meanwhile, the pound is up by 0.6pc towards the yen. Both Japan and the eurozone are far more uncovered to any tariffs on China than Britain is.
The UK’s items exports to the US account for round 2pc to 3pc of the dimensions of the financial system. Even in the event that they had been to be hit with tariffs, Pickering argues the general financial influence can be small.
“If you were to consider the impact of a 10pc or 20pc trade tariff on that, as long as the UK didn’t retaliate you’d be thinking about marginal economic impacts,” he says.
Henig admits that Trump’s embrace of tariffs is “not great”, however says: “On the other hand, he doesn’t particularly regard the UK as a problem. He often goes on about China or Germany, not usually about the UK. At least we’re not first in the firing line.”
He believes Trump will solely comply with by on some tariff threats. “It’s a bargaining chip. It’s just going to be a bit chaotic,” Henig says.
Trump has a number of golf programs in Scotland, he provides, “so will treat them nicely”.
Trump has a number of golf programs in Scotland – Robert Perry/Getty Images Europe
The UK might in truth be capable of revenue from a US-led commerce struggle if it positions itself the appropriate means, he argues.
“We should pitch ourselves as a country that believes in trading. We should try to keep out of it and say the UK is the place you come to if you want to trade.”
Such a situation may ultimately carry some financial advantages. “It’s not something that will happen quickly but slowly perhaps it helps,” Henig says.
Then there’s the prospect of a commerce cope with the US. Joe Biden’s administration confirmed no real interest in any settlement, with the Democratic president postpone by the implications of Brexit for Ireland.
Trump was extra open to a deal when final in energy. His former commerce adviser Robert Lighthizer again in 2020 informed the BBC: “We’re both leaders in the world on digital trade on financial services. And I think we could do an awful lot to write the rules together, the best rules together.”
It stays to be seen how eager Trump shall be this time round. Much will come down to non-public relationships.
Sir Keir Starmer was fast to congratulate the incoming president on his “historic election victory”. Chancellor Rachel Reeves equally informed MPs this week that she was assured commerce flows with the US “will continue under the new president”.
However, Labour’s help for practically 100 activists who went to the US to struggle in Kamala Harris’s marketing campaign now appears to be like foolhardy. Trump’s marketing campaign filed a grievance to the Federal Election Commission, accusing Labour of “blatant foreign interference”.
Jordan Rochester at Japanese banking group Mizuho doesn’t consider the UK will get a carve-out from tariffs.
He factors to the harm finished already by Starmer himself, who has mentioned Trump doesn’t perceive “humanity and dignity”. Meanwhile, David Lammy, the Foreign Secretary, has up to now referred to as him a “neo-Nazi sociopath”.
David Lammy, the Foreign Secretary, has up to now referred to as Trump a neo-Nazi sociopath’ – OLI SCARFF
“Anyone who argues that he’s not going to do tariffs wasn’t really listening to him whatsoever during any of the campaign. This is a man who’s talked about tariffs quite consistently over 40 years,” Rochester says.
Nigel Farage might but show to be an influence dealer in any deal. The Reform chief has an in depth relationship with the brand new president, with Trump giving a shout out to his “friend” throughout a rally in Pennsylvania in the course of the remaining few days of the marketing campaign. Whether Farage shall be prepared to assist Labour with a deal is one other query.
Experts see the prospect of a full deal as slim. Bain says {that a} complete free commerce settlement is unlikely due to disagreements over agricultural requirements, which have all the time been a sticking level.
Even nonetheless, smaller wins are nonetheless attainable.
“There are some mini-agreements around supply chains, critical imports and digital trade which could be done with the incoming administration,” he says. This would “absolutely” have financial advantages for British corporations, he says.
Britain may profit if Trump scraps the Inflation Reduction Act (IRA) too, or not less than weakens the inexperienced subsidies provided by the present administration. The IRA was blamed for ravenous a lot of the remainder of the world of funding by providing subsidies so engaging that it drew capital from all around the world to the US.
Trump has pledged to scrap help for the wind business on day certainly one of his return to the Oval Office and is a famous inexperienced vitality sceptic. There are indicators that his victory is already influencing funding intentions.
Andy Brown, deputy chairman of Danish vitality big Ørsted, informed the BBC’s Today Programme: “We may have to adjust our focus. In terms of the world of offshore wind, the UK is much more relevant than the US.”
As Trump returns to the White House promising tariffs, Britain might but discover some silver linings.
