UK-US Trade Deal Unlikely, Liz Truss Admits on First Overseas Trip as PM

Strategic Insights -

British Prime Minister Liz Truss has revealed that a UK-US trade deal is not on the horizon, contradicting Brexit supporters' claims that the 2016 Leave vote would open the way for a free trade agreement with the US. Truss made the admission during her first overseas trip as prime minister, en route to the UN General Assembly in New York. Her frank assessment ahead of a meeting with US President Joe Biden has left a hole in the government's post-Brexit trade strategy, a core part of Truss's ambition to boost the UK's growth rate.

Key Takeaways:

  • The UK-US trade deal, long seen as a prize of Brexit, is not on the horizon, with no negotiations currently taking place and no expectation of starting in the short to medium term.
  • Truss's focus is on joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, along with deals with India and the six countries of the Gulf Cooperation Council.
  • A leaked government paper in 2018 assumed a US trade deal might boost Britain's gross domestic product by 0.2 per cent in the long term, but Truss declined to comment on when a trade deal with the US might be feasible.
  • The US government, led by President Biden, has made it clear that a trade deal with the UK is not a priority, with Biden and Congress in no hurry to strike one with Britain.
  • Truss's comments reflect the fact that Biden wants her to settle a row with the EU on post-Brexit trading arrangements in Northern Ireland, which is expected to come up during their meeting.

Statistics:

  • 0.2%: the assumed boost to Britain's gross domestic product from a US trade deal, according to a leaked government paper in 2018.
  • 0.1-0.4%: the estimated total boost to GDP from deals with India, Australia, the Gulf and southeast Asia, according to the same leaked paper.
  • 4%: the expected cut to GDP in the long term due to Brexit, according to official forecasts.
  • No date specified: when negotiations on a US trade deal might start or when a deal might be feasible.

Sources:

  • Truss, Liz (2022). Interview with reporters en route to the UN General Assembly in New York.
  • Biden, Joe. Unspecified source, referenced in text: "US government not in hurry to strike a trade deal with the UK."
  • Pelosi, Nancy (2022). Statement to the US House of Representatives, referenced in text. "Unilateral UK legislation to scrap the Northern Ireland protocol could endanger Britain's prospects for a free trade deal."
  • Leaked government paper (2018). Unspecified source, referenced in text. "Assumed a US trade deal might boost Britain's gross domestic product by 0.2 per cent in the long term."