The UK may be on the brink of agreeing a new trade deal with the US after nearly five years of negotiations.
The previous government began discussions for a free trade agreement in May 2020 with then-president Joe Biden’s administration.
Now, vice-president JD Vance has said that there is a “good chance” a deal could be reached between the two countries, as the world reels from the global trade war prompted by Donald Trump’s tariffs.
The UK has received the lowest possible tariff rate, with 10 per cent taxes applied on exports to the United States, which Mr Vance has said was partly due to America’s “cultural affinity” with Britain.
Sir Keir Starmer’s government has made no pretence over the fact that it is not looking for a traditional comprehensive trade deal. Instead, it is pushing for an agreement based around the growth of “future” industries, such as biotech, new pharmaceuticals and artificial intelligence.
The proposal is that the UK and US research base, coupled with the money markets in New York and London, would create a powerhouse for the latest industrial revolution, which could shape the future of the world.
The US largely embraces this idea, but there are caveats, and the negotiations have been complicated by President Trump’s tariffs.
While a final deal would see close integration for those future growth industries, it now would also mean deals on more traditional areas to remove tariffs altogether.
The biggest issue – as is often the case – will be how far it affects agricultural products. Mr Trump’s team would like the UK to allow chlorinated chicken or beef with added hormones. But the UK does not want to go this far.
There could also be demands for the UK to repeal legislation on tech controls, which the White House says affects free speech.
In the end, the quick deal will be closer to the UK vision on future growth technologies, but the ongoing question is how much Sir Keir will have to compromise in other areas.
The US continues to be Britain’s largest single-country trading partner, followed by Germany, the Netherlands, Ireland and France. As a bloc, trade with the EU is significantly higher.
The UK has nearly no trade imbalance with the US when it comes to goods, exporting £59.3bn and importing £57.2bn in 2024.
This has likely contributed to the fact that Britain has not been in Mr Trump’s firing range when it comes to extra tariffs – and why a trade deal is on the cards.
