UK eyes new trade deal with ‘protectionist’ Trump

The opportunity for a new trade deal between the US and the UK has arisen alongside fears of disruption to international trade agreements following promises made during Trump’s election campaign.

Donald Trump \"protectionist\". Fears over international trade deals
Britain made optimistic noises over the opportunities for a new trade relationship with the US as markets across the world attempted on Thursday to figure out what Donald Trump's victory might mean for the future of trade deals and the global economy. Economists were fearful the US president-elect would make good on his campaign promises to "make America great again" by scrapping international trade agreements and attempting to repatriate jobs lost overseas to China, Mexico and elsewhere.

An existential threat

Forbes magazine has described a Trump presidency as "an existential threat to existing economic, political and security frameworks that have been in place for more than 70 years"."Trump’s mercantilist trade plan calls for using the power of the Executive Order to impose a 45 per cent tariff on a broad swath of imports from China, 35 per cent tariffs on items produced in Mexico, and arbitrary tariffs of between 15–45 per cent for any country deemed to be a 'currency manipulator'," said Forbes."Prime targets include the European Union, Japan and South Korea, which, taken together with China and Mexico, represent five out of America’s top six trading partners."These protectionist tariffs would be the precursor to a destructive chain of events that would harm manufacturers and consumers in both the US and Asia and would lead to disrupted supply chains, imploded trade relationships and, ultimately, trade wars."

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Mr Trump's oft-repeated opposition to trade deals, which, he says, have seen American jobs move abroad, have included demands for a renegotiation – or, perhaps, even scrapping – the North American Free Trade Agreement with Canada and Mexico; abandoning the Transatlantic Trade and Investment Partnership (TTIP) with the European Union and the Trans-Pacific Partnership (TPP) with up to a dozen Pacific rim nations. 

Trump describes Nato as "obsolete"

He has also been a critic of the World Trade Organization, in particular China's membership terms, and Nato, which he describes as "obsolete" and unfair to the US given that it funds some 75 per cent of defence spending by the organisation. The Peterson Institute of International Economics, an independent US thinktank, has estimated that, if implemented, Mr Trump’s punitive trade policies would cost the US four million jobs and send the US into a recession.Analysts point out that that the global supply chains provides jobs both in the US and around the world. GE, for example, employs about 125,000 people in the US and another 175,000 around the world involved in sub-assemblies and manufacturing parts and components. "Myriads of items must pass back and forth between the United States, China, Mexico – and other countries – before a finished product can be fully 'manufactured' in the US," said Forbes.

Global warming and climate change

Mr Trump has also said he would "cancel" the Paris climate change deal signed by more than 195 countries last year, stop all US payments to United Nations global warming programmes, approve increased drilling for fossil fuels and approve the Keystone XL oil pipeline from Canada.But while many are nervous about what this could mean for the global economy, UK Chancellor of the Exchequer Philip Hammond, speaking ahead of the UK–China Economic and Financial Dialogue conference in London, said he was looking forward to a "very constructive" relationship with Mr Trump.

Trump and the UK government

Mr Hammond told BBC News, “President Trump has just been elected by the American people. He will want to consult with his advisers, talk to officials and I am sure we will have a very constructive dialogue, as we do with the Chinese, with the new American administration.”Mr Hammond accepted there had been warnings from the World Trade Organization that a new American protectionism could hamper growth and said the UK remained committed to the principle that the best way to protect jobs and prosperity was free trade and open markets. However, he said that he also recognised concerns “around dumping and unfair practices”. Mr Hammond added, “It's about getting the right balance in the global trading system so that we can have the benefits of open markets, while being properly and appropriately protected from unfair practices.” Saying he looked forward to working with the new US administration, Mr Hammond said, “We have very strong and close ties with the United States and as we begin the process of negotiating our exit from the European Union, of course we will want to talk to the Americans about future opportunities for deepening our trade links with the United States.”

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