Back in 2017, Boris Johnson was expressing confidence about the UK being at the forefront for a significant trade deal with the US. A couple of years later, Liz Truss stated that her chief concern was sealing a free trade agreement with America. Dominic Raab, who held a high-ranking cabinet position around that time, relaid President Trump’s eagerness for a comprehensive trade pact with the UK.
However, Rishi Sunak revealed a different perspective on the matter last summer. He admitted that such a trade deal had ceased to be a priority for both nations. The UK government’s greatest flaw has been its misunderstanding of American interests. From the outset, Brexit was a mammoth gamble on the US’s economic liberalisation. The plan was that a two-sided trade agreement with the US would compensate for the UK’s loss of open access to the EU market.
Not only was the absence of such a deal disappointing (although highly predictable), but the issue was further compounded by the shift in US policies under both Donald Trump and later Joe Biden towards broader protectionism. This is leading to a disaggregation of world trade. To compound this grim situation for the UK, there is no deal with the US, coupled with dwindling chances of deals with other nations.
As the US undermines the World Trade Organization, blocking critical appointments, Britain cannot rely on multilateralism to maintain the vitality of liberal trading. In essence, the nation gambled its future on trade just as the concept was falling out of favour worldwide. This is akin to pouring all of one’s savings into a DVD production company around 2009.
Putting aside the debate over whether the US is correct in its shift away from trade, the truth remains that the shift is indeed occurring, and the Tories should have foreseen this. Anyone familiar with the American milieu could have cautioned them not to mistake the nation as a strong supporter of free trade.
Going back to 1992, Ross Perot, a trade sceptic, won a significant 19% of the national vote running as an independent candidate for president. The legislation that empowers the president to semi-freely negotiate trade deals, known as “Fast Track”, has expired multiple times either side of the turn of the century, due to bipartisan suspicion in Congress.
The periods highlighted here were known as the peak of ‘neoliberalism’. One can only ponder how much more forceful the urge for protectionism was during normal seasons. Instead of assuming, take a look at the past. The historical records show the protective tariffs of the 1800s as well as Alexander Hamilton and Abraham Lincoln’s preference for a stronger state. Smoot-Hawley wasn’t a deviation during the interwar period.
The United Kingdom had its own protectionist measures including the Corn Laws and Imperial Preference. Nonetheless, the impulse for protectionism is far stronger in America than it could possibly be in a relatively small, resource-deprived island chain. This tendency then morphs into actions through advocacy groups within specific industries, which are impressively large and intricate. (Forecast: numerous sectors will be identified as ‘strategic’ in the conflict with China.)
The duty of a British government is to comprehend these aspects before staking the nation’s entire future on the assumption that the United States will perpetually defend global trade.
It is entirely the US’s right as a sovereign nation. If I resided in a market that spans a whole continent with abundant resources, I would need considerable convincing from David Ricardo and The Economist that I am better off trading. However, that is the main concern. The conservatives believe that the critical aspect about the US is that it consists of Britain’s ‘relatives’. (It is not, unless we refer to the 1810 census.) Geographic and geologic realities indicate that the US is far less reliant on international trade.
Following that, the subsequent most significant fact is their positioning. The US is safeguarding its place as the preeminent global power. Imports from China, such as electric vehicles, incite anxieties that are not as intense in Britain.
[ Biden and Sunak emphasise improved economic relations but the effects of Brexit persist]
One might not appreciate this aspect of the US, and might even see it as overreactionary. The duty of a British government, however, is to understand these facets prior to gambling the nation’s future on the notion that the US will eternally support world trade.
The error in judgement was on behalf of the “Atlanticist” Conservatives who idolise Andrew Roberts and incessantly check the precise location of the Churchill statue in the White House. These individuals maintain a disdain for Barack Obama for relocating the statue. Unfortunately, their understanding of American politics fell short, leading to a failure on their part. Britain is set to bear the consequences of this misjudgement for many years to come.
The connotation of the term ‘trade’ varies greatly between the two nations. In Britain, it holds a noble tone since the repeal of the Corn Laws, facilitating access to food for the lesser-privileged class. However, in America, the narrative is not as straightforward, given their history with the cotton-exporting free-trading Confederates. This scenario illustrates the distinctive nature of these two nations. – Copyright The Financial Times Limited 2024