Economy & Politics

Trump and Johnson are trapped in the trade trap

British Prime Minister Johnson (left) and US President Trump at a meeting on the sidelines of the G7 summit in Biarritz last year
British Prime Minister Johnson (left) and US President Trump at a meeting on the sidelines of the G7 summit in Biarritz last yearimago images / ZUMA Press

Donald Trump and Boris Johnson have maneuvered themselves into a tricky situation. You will need some skill to emerge victorious from this situation. With their nationalist economic rhetoric, the US President and the British Prime Minister have aimed at one and the same goal: international organizations such as the EU or the World Trade Organization WTO, which supposedly rob the United States and Great Britain of their sovereignty with gag contracts.

But now they are not competing against bloodless institutions for the first time, but against someone who follows the same strategy. Both want to squeeze new concessions from each other in a free trade agreement, thereby proving that bilateral deals are better than the multilateral agreements they loathe. The conflict is therefore not just a duel between the populists on both sides of the Atlantic. It is also a test case for the chances of success of global economic populism.

“America First” or “Take Back Control”?

Trump has promised “America First” to his supporters and claims: Get out of the WTO, get out of existing contracts like the North American free trade area NAFTA, then everything will get better. So far, the balance of this trade war has been extremely modest. He essentially only renamed the NAFTA agreement with Mexico and Canada. Negotiations with China stall despite the massive customs war with Beijing. Trump has also imposed punitive tariffs on steel from the EU and is threatening Europe with car tariffs, but Brussels is also not considering giving in.

Boris Johnson copied Trump. With the slogans “Take back control” and “Get Brexit Done”, he led the British out of the EU. It is not for nothing that the US president called him “Britain’s Trump” when he took office in the summer. Both have the same message: “We will have tough negotiations with all of our trading partners,” Johnson promised before his election in December. “And are determined to burst it if it is in the national interest.” Better jobs, higher wages and lower prices across the UK – these are the official negotiation goals the Johnson government has announced. Too bad that all of this should come from someone who has promised the same thing to his fans.

There is a lot at stake for both sides. The USA is the second largest export market for Great Britain after the EU, and the Kingdom is Washington’s fourth largest trading partner. However, the economic factor alone is not the decisive factor in the deal: Even Johnson’s own government estimates that it could at best only increase long-term growth in the UK by 0.16 percent. It is at least as important to save face and to be able to present yourself as a winner to the voters.

London fears the chlorinated chicken invasion

In the election campaign, Johnson promised to “unlock Britain’s potential” after the Brexit with trade deals. He has agreed “not to endanger our high environmental, animal welfare and food standards”. But there are a number of topics that Trump would love to take the butter off his bread.

The US government not only wants to enforce full market access for its pharmaceutical and medical companies and talk the British side out of a digital tax for US internet giants such as Amazon, Facebook and Google. For the first time, it plans to import chlorine chicken and hormone meat from US manufacturers, which have so far been banned in the EU, to Great Britain. Johnson, on the other hand, wants Washington to lift its existing punitive tariffs on steel exports and Scottish whiskey and to exempt London from any car tariffs.

Johnson is in a weaker position: Britain’s economy is an economic dwarf compared to the United States. Trump’s predecessor Barack Obama had already warned the British that if they left the EU they would have to queue for a new trade deal “at the end of the line”. Johnson is also under time pressure. The talks with Brussels over a new trade deal after Brexit, which are ongoing in parallel with the negotiations with Trump, are on the brink of failure. A further extension of the negotiation period has rejected London’s negotiators: “We will regain control on January 1, 2021,” Michael Gove tweeted last Friday. Either there is an agreement by the end of the year. Or horrific tariffs will be due on Britain’s exports to Europe early next year. This weakens Johnson’s negotiating position with Washington.

As a result, the British prime minister already seems to be buckling when it comes to food. In early June, London proposed to import chlorinated chicken and hormone meat, albeit with high tariffs. Even some Tory MPs have accused Johnson of sacrificing British standards for a deal with Trump. But the US president will also have to make concessions. After all, he is standing for re-election in November and until then he urgently needs success for his “America First” policy. “I think we’re going to make a fantastic and big trade deal with Britain,” Trump announced. It would be quite embarrassing for both of them if the agreement failed. To prevent this from happening, Trump and Johnson would have to understand that trade agreements are laboriously balanced compromises from which both sides benefit – even if they give in on individual questions.

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