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| Making Trans-Atlantic Trade Great Again | Making Trans-Atlantic Trade Great Again |
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| In the world according to President Trump, the United States and Britain are about to make their special relationship great again. Having cast off decades of global niceties — the United States by putting him in the White House, Britain by voting to leave the European Union — they can now forge a magnificent future. | In the world according to President Trump, the United States and Britain are about to make their special relationship great again. Having cast off decades of global niceties — the United States by putting him in the White House, Britain by voting to leave the European Union — they can now forge a magnificent future. |
| Mr. Trump is readying proof. As he prepares to host Prime Minister Theresa May of Britain at the White House on Friday, he intends to begin discussions on a free-trade agreement that would deepen commercial ties between their countries. | |
| A trade agreement would make for useful political theater on both sides of the Atlantic, particularly as President Barack Obama had pointedly warned that a deal would not easily happen. But as a spur to economic expansion and hiring, a deal would almost certainly amount to very little. | A trade agreement would make for useful political theater on both sides of the Atlantic, particularly as President Barack Obama had pointedly warned that a deal would not easily happen. But as a spur to economic expansion and hiring, a deal would almost certainly amount to very little. |
| Until Britain actually leaves Europe — a step most likely at least two years away — it is legally barred from entering a trade agreement with any country. If a deal was quietly negotiated to take effect after Britain’s departure, its economic punch would probably be modest. Tariffs between the countries are already minimal, meaning there are relatively few trade impediments left to clear away. | |
| What areas of business could be opened to increased competition tend to be the most politically sensitive: agriculture, government procurement and defense. Legions of lobbyists would mount ferocious battles to preserve the privileges of now-favored industries. | What areas of business could be opened to increased competition tend to be the most politically sensitive: agriculture, government procurement and defense. Legions of lobbyists would mount ferocious battles to preserve the privileges of now-favored industries. |
| American federal government contracts would attract keen interest from British defense and aerospace companies, especially as Mr. Trump has vowed to rebuild the military. But opening such business to foreign competitors in a trade agreement would directly collide with Mr. Trump’s “America First” mantra. | American federal government contracts would attract keen interest from British defense and aerospace companies, especially as Mr. Trump has vowed to rebuild the military. But opening such business to foreign competitors in a trade agreement would directly collide with Mr. Trump’s “America First” mantra. |
| “If President Trump genuinely means ‘buy American, hire American’ above all else, then there’s going to be very little left to offer other countries,” said Adam S. Posen, a former member of the rate-setting committee at the Bank of England and now president of the Peterson Institute for International Economics in Washington. “There is no way in hell this is a massive trade deal. It would take massive effort to create a trade deal of even minimal effect.” | “If President Trump genuinely means ‘buy American, hire American’ above all else, then there’s going to be very little left to offer other countries,” said Adam S. Posen, a former member of the rate-setting committee at the Bank of England and now president of the Peterson Institute for International Economics in Washington. “There is no way in hell this is a massive trade deal. It would take massive effort to create a trade deal of even minimal effect.” |
| Trade, it is worth noting, tends to involve trade-offs. Negotiations are politically fraught, because they expose domestic industries to the prospect of greater competition with overseas companies. In exchange, domestic consumers gain access to more and cheaper products. | Trade, it is worth noting, tends to involve trade-offs. Negotiations are politically fraught, because they expose domestic industries to the prospect of greater competition with overseas companies. In exchange, domestic consumers gain access to more and cheaper products. |
| British steak aficionados may cheer the shrinking of steep tariffs that limit the influx of American beef. The British beef industry would probably respond less enthusiastically. It would seek protection, particularly as Britain’s exit from the bloc would eliminate European subsidies for British agriculture. Any proposed opening of agriculture would probaly provoke British opposition to genetically modified crops. | |
| British insurance companies may be eager for a greater crack at the enormous American market, but that would be outside the scope of a potential deal. In the United States, the insurance industry is regulated at the state level, meaning the Trump administration would lack the authority to engineer an opening. | British insurance companies may be eager for a greater crack at the enormous American market, but that would be outside the scope of a potential deal. In the United States, the insurance industry is regulated at the state level, meaning the Trump administration would lack the authority to engineer an opening. |
| The biggest impediment to a substantial deal between Britain and the United States is the similarity of the two economies, and especially the importance of financial services on both shores. | The biggest impediment to a substantial deal between Britain and the United States is the similarity of the two economies, and especially the importance of financial services on both shores. |
| Opening finance to greater competition would require that British bankers pledge fealty to American regulations. Either that, or the rules would have to be opened and renegotiated by both sides. That might happen in the same way that Mr. Trump might perhaps renounce shiny ties and golf in favor of tie-dye and Zen meditation. | Opening finance to greater competition would require that British bankers pledge fealty to American regulations. Either that, or the rules would have to be opened and renegotiated by both sides. That might happen in the same way that Mr. Trump might perhaps renounce shiny ties and golf in favor of tie-dye and Zen meditation. |
| For American companies, the appeal of giving something up to gain access to the British market has been diminished by the very thing that makes such a trade permissible: Britain’s looming exit from Europe, known as Brexit. | For American companies, the appeal of giving something up to gain access to the British market has been diminished by the very thing that makes such a trade permissible: Britain’s looming exit from Europe, known as Brexit. |
| Britain’s inclusion in the European Union and its enormous single market has made Britain a prized center for manufacturing and corporate headquarters for multinational companies. American investment banks have been able to set up shop in London and use these bases to serve clients from Ireland to Romania, as if operating in one country. | Britain’s inclusion in the European Union and its enormous single market has made Britain a prized center for manufacturing and corporate headquarters for multinational companies. American investment banks have been able to set up shop in London and use these bases to serve clients from Ireland to Romania, as if operating in one country. |
| But once Britain leaves Europe, these benefits would almost certainly disappear, raising endless questions about the future terms of trade across the English Channel. | But once Britain leaves Europe, these benefits would almost certainly disappear, raising endless questions about the future terms of trade across the English Channel. |
| Already, major banks are publicly outlining plans to shift some operations to cities in the European Union, exploring Dublin, Paris and Luxembourg. Already, major multinational companies are expressing reservations about sinking the next investment in Britain. | |
| All of this makes a trade deal less compelling, diminishing the stakes, leaving politics as the most meaningful context. | All of this makes a trade deal less compelling, diminishing the stakes, leaving politics as the most meaningful context. |
| Last year, before Britain’s referendum, Mr. Obama visited the country and urged voters to opt for remaining in Europe. He sought to undercut a key aspiration of those urging a break from the bloc — the prospect that a more independent Britain could strike a free-trade deal with the United States. | Last year, before Britain’s referendum, Mr. Obama visited the country and urged voters to opt for remaining in Europe. He sought to undercut a key aspiration of those urging a break from the bloc — the prospect that a more independent Britain could strike a free-trade deal with the United States. |
| Washington had little interest in striking deals with single countries, Mr. Obama said, preferring to focus on giant multilateral trade arrangements like the sprawling Trans-Pacific Partnership (a deal Mr. Trump just renounced). If it sought a trade deal with the United States, Britain would land “in the back of the queue,” Mr. Obama warned. | Washington had little interest in striking deals with single countries, Mr. Obama said, preferring to focus on giant multilateral trade arrangements like the sprawling Trans-Pacific Partnership (a deal Mr. Trump just renounced). If it sought a trade deal with the United States, Britain would land “in the back of the queue,” Mr. Obama warned. |
| With Mr. Trump now in the White House, Britain’s place in the queue has effectively been upgraded, a handy development for Mrs. May as she presses ahead with Brexit. She is under pressure to demonstrate that Britain, once liberated from Europe, can harvest bounty via trade with faster-growing, more innovative parts of the globe. A trade deal with the largest economy on earth would presumably check that box. | With Mr. Trump now in the White House, Britain’s place in the queue has effectively been upgraded, a handy development for Mrs. May as she presses ahead with Brexit. She is under pressure to demonstrate that Britain, once liberated from Europe, can harvest bounty via trade with faster-growing, more innovative parts of the globe. A trade deal with the largest economy on earth would presumably check that box. |
| “It is clearly in the British government’s political interest to show that it can negotiate a free-trade agreement with the United States,” said Stephen Woolcock, a trade expert at the London School of Economics. “The question is what the economic costs and benefits of such an agreement would be? These would seem to be less clear cut.” | “It is clearly in the British government’s political interest to show that it can negotiate a free-trade agreement with the United States,” said Stephen Woolcock, a trade expert at the London School of Economics. “The question is what the economic costs and benefits of such an agreement would be? These would seem to be less clear cut.” |
| In much of the world, Britain’s decision to abandon the European Union has been construed as a retrenchment of British influence and a disengagement from global affairs. In recent weeks, Mrs. May has labored to displace that notion by describing post-Brexit Britain as a land of dauntless capitalists scouring the planet for fresh opportunities. | In much of the world, Britain’s decision to abandon the European Union has been construed as a retrenchment of British influence and a disengagement from global affairs. In recent weeks, Mrs. May has labored to displace that notion by describing post-Brexit Britain as a land of dauntless capitalists scouring the planet for fresh opportunities. |
| In a speech at the World Economic Forum in Davos, Switzerland, last week, she described a British exit as “a vote to take control and make decisions for ourselves and, crucially, to become even more global and internationalist in action and in spirit, too. Because that is who we are as a nation.” | In a speech at the World Economic Forum in Davos, Switzerland, last week, she described a British exit as “a vote to take control and make decisions for ourselves and, crucially, to become even more global and internationalist in action and in spirit, too. Because that is who we are as a nation.” |
| A trade deal with the United States could be considered evidence to further that case. | |
| Mr. Trump could post a deal with Britain on Twitter as proof he is not, despite popular perceptions, a nativist protectionist leading the United States on a retreat from global concerns. | Mr. Trump could post a deal with Britain on Twitter as proof he is not, despite popular perceptions, a nativist protectionist leading the United States on a retreat from global concerns. |
| Mr. Trump has strong-armed Carrier and Ford Motor into altering plans to shift production from American factories to Mexico, cashing in on photo opportunities that allow him to claim he is engineering a renaissance in industrial America, even as the big picture remains unchanged. | |
| In a similar vein, he could use a trade deal with Britain — even a narrow, economically inconsequential one — to claim vindication for his encouragement of leaving the bloc. That could resonate with the sort of voters who make up Mr. Trump’s base as well as supporters of Brexit in Britain — that is, those inclined to blame immigrants for economic afflictions. | In a similar vein, he could use a trade deal with Britain — even a narrow, economically inconsequential one — to claim vindication for his encouragement of leaving the bloc. That could resonate with the sort of voters who make up Mr. Trump’s base as well as supporters of Brexit in Britain — that is, those inclined to blame immigrants for economic afflictions. |
| “Trump can play to his constituents,” Mr. Posen of the Peterson Institute said, people “who believe that trade deals among white rich people are particularly desirable.” | “Trump can play to his constituents,” Mr. Posen of the Peterson Institute said, people “who believe that trade deals among white rich people are particularly desirable.” |