Faisal Islam: US-UK deal isn't really about trade - it's about avoiding tariffs

The US-UK commercialized woody warmly suggested by President Donald Trump should assistance insulate the UK from the nonstop interaction of planetary commercialized tensions.

It signals that the White House has accepted the statistical logic that the US and UK person a balanced commercialized position.

Essentially each state astir exports the aforesaid magnitude of goods to 1 another. Indeed, alternatively helpfully, according to the US numbers it exports more.

There is nary wide lawsuit that the UK is, successful the words and logic of the president, "ripping off" oregon "screwing" the US, arsenic helium has suggested of galore different countries and the EU.

So a woody to debar the further commercialized barriers is precise overmuch connected the cards.

But this is not the wideranging US-UK escaped commercialized statement to little astir each existing tariffs, that was the taxable of truthful overmuch statement successful the Brexit era.

It is important to retrieve that the wider woody was ne'er decently prioritised by Trump's ain team, because, arsenic they told me, they ne'er genuinely believed that the UK would find it successful its involvement to marque the indispensable hard interruption from the EU.

It is hard to spot that the UK authorities would privation to further aggravate farmers, oregon its ain base, by putting US workplace imports oregon NHS pricing connected the table.

In addition, connected goods trade, the authorities is already prioritising its "Brexit reset" - a nutrient standards deal, and immoderate customs arrangements to bring down newish commercialized barriers with the European Union. Tellingly, the apical authoritative connected that dialog was successful the Oval Office.

The narrower "economic deal", arsenic it was termed by Sir Keir Starmer, centres astir exertion and what the UK has referred to arsenic the "further integration of our 2 countries' tech sectors".

Perhaps the champion analogy is that the tech expertise held wrong the London-Oxford-Cambridge triangle could go for a booming AI-driven Silicon Valley what London's fiscal City became to New York's Wall Street. The information that Vice President and large tech state JD Vance volition beryllium starring immoderate of the US dialog is cardinal here.

This strategy volition person consequences. Trump's squad are already railing against integer services taxes.

The UK's integer services taxation was introduced successful 2020 and imposes a 2% complaint connected revenues made by large tech firms moving societal media, net hunt engines oregon online marketplaces.

While the £700m-£1bn a twelvemonth it raises successful the UK is smallish beer, since the UK and France introduced a deed to large tech's revenues, galore different countries person followed suit.

The White House wants to "stop the contagion", and that could mean persuading the UK to little oregon abolish it. Chancellor Rachel Reeves advocated raising it from 2% to 12% conscionable 4 years ago.

Likewise the vice president successful the Oval Office mentioned US tech firms being unfairly affected by what helium called "freedom of speech" issues.

This appears to beryllium a notation to the Online Safety Act. This aims to marque societal media firms and hunt engines support children and adults successful the UK from illegal, harmful material, though immoderate person argued it risks stifling escaped look online. My knowing is that, close now, question whitethorn beryllium little apt here.

The prize volition beryllium integration into the monolithic investments from the champion capitalised tech companies successful the world.

Could the UK commencement to pull backmost immoderate of the investments mislaid to Dublin, for example? Would the EU basal backmost and let the UK to make arsenic an offshore hub for US tech companies to work the full of Europe?

There are 2 different important issues. It is not chartless for lukewarm words successful the Oval Office to beryllium somewhat contradicted by actions soon after. While sat adjacent to the PM, President Trump described the EU's levying of VAT arsenic a commercialized restriction, seemingly unaware that the UK does precisely the aforesaid thing.

And adjacent if it avoids nonstop caller tariffs from President Trump, the unfastened UK system would beryllium affected by immoderate wide-ranging commercialized warfare involving astir of the G7 and different countries.

That is inactive connected the cards. Not lone would that illness satellite maturation and perchance spike up ostentation again, but could upend wholly the workings of the World Trade Organization.

The PM says the UK doesn't person to take betwixt the US and different allies, but it whitethorn look similar that to them.

The strategy appears to beryllium to go the Switzerland of planetary economics. Neutrality successful a satellite of commercialized turmoil, not truthful overmuch sat connected a fence, but tiptoeing on a alternatively wobbly one.