UK businesses are seeking greater involvement in formulating trade policy, as the protectionism advocated by US President-elect Donald Trump plunges exporters into uncertainty.
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Published Dec 09, 2024 • 3 minute read
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(Bloomberg) — UK businesses are seeking greater involvement in formulating trade policy, as the protectionism advocated by US President-elect Donald Trump plunges exporters into uncertainty.
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Business leaders should have a say in trade negotiations at an earlier stage so they can provide specialist advice to the government, the British Chambers of Commerce said late on Monday in a report. Currently, firms are usually only consulted when an agreement in principle has been reached between negotiating partners.
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The call comes as Trump’s election to a second presidential term — which he’ll start next month — has put a spotlight on international trade relationships because of his pledge to slap tariffs of up to 20% on all imports to the US, with greater charges for commerce from China. Economists warn that in the short-term, that’s likely to disrupt UK supply chains and weigh on industries which export heavily across the Atlantic.
Prime Minister Keir Starmer, who inflicted a historic defeat on the incumbent Conservatives in July’s general election, has vowed to boost growth in the British economy during this parliament, a position that’s in part reliant on boosting trade and foreign investment. The US is the UK’s biggest individual trading partner, meaning the premier’s goals are threatened by the prospect of a hit to trans-Atlantic trade caused by Trump’s promised tariffs.
That raises the prospect that the government may seek to revive negotiations on a US trade deal which were started during Trump’s first term, before being abandoned under President Joe Biden, in order to secure a more advantageous position. However any trade talks may be complicated by Starmer’s desire to seek closer trading ties with the European Union — whose 27 members account for a bigger slice of British trade than the US.
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“It is currently anyone’s guess as to what the world’s trading relationships will look like in the new year, but everyone recognizes that a new era of tariffs is likely on the way,” said BCC President Martha Lane Fox, who’s also Chair of the Business Council. The BCC represents tens of thousands of firms across the country.
In a demonstration of what’s at play for the UK in trade negotiations with the US, half of supply chain decision-makers at large organizations in the two countries said they’re concerned changes in US trade policy will cause disruption, according to a survey by procurement software company Ivalua. Just under half foresee rising supply-chain costs that will reduce their profitability.
The BCC recommended a number of reforms to government processes, including greater involvement for businesses in trade negotiations, putting aside extra funding to support exporters, and publishing data on the rates at which businesses are making use of current free trade agreements.
“The UK is no longer part of a large trade bloc, which gives us more flexibility in how we respond,” said Lane Fox. “However, we must also make sure we are in the best shape possible to do that.”
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The BCC also said it saw a “strong case” for pursuing a “reset” of free trade negotiations with Canada and Mexico, and in scoping possibilities for similar negotiations with Indonesia and Thailand. Talks with Canada were abandoned at the start of 2024 under the previous Conservative government, while those with Mexico stalled last year.
The BCC also made a number of recommendations around boosting investment in the UK, including working with key trading partners to drive “policy coordination”, and providing further guidance to lenders so they could improve the supply of their infrastructure and trade finance products.
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