Volkswacht Bodensee - UK firms cautiously optimistic on US trade deal prospects

After hosting Starmer at the White House on Thursday, Trump signalled the potential for a "great" post-Brexit trade accord, one that Britain has been seeking out since its departure from the European Union.

New negotiations between the countries provide "a real opportunity to take the heat out of the uncertainty created by the risk of tariffs on UK exports", said William Bain, head of trade policy at the British Chambers of Commerce.

An agreement could allow Britain to avoid the hefty 25 percent tariffs Trump plans to levy on goods entering the US from Mexico, Canada and the European Union.

"The prospect of a comprehensive trade deal would be a huge boost for the UK economy," said Chris Hayward, policy chairman at the City of London Corporation, which represents the financial services sector.

- 'UK remains vulnerable' -

A deal would be a "clear win" for Starmer, said Susannah Streeter, head of money and markets at stockbroker Hargreaves Lansdown.

But she warned that "Trump is famous for about-turns when it comes to trade, dangling the potential of deals and then re-threatening tariffs".

"So until any agreement is signed, sealed and delivered, the UK remains vulnerable," she said.

Britain's car industry body, the SMMT, told AFP that it preferred to wait for details of a potential deal before responding.

The "hard yards are still ahead", UK Health Secretary Wes Streeting told Sky News on Friday.

"We genuinely think there's a lot in it for both the UK and the US and our collective economic security," he said, adding that the Labour government wanted to move quickly on a deal.

For David Henig, a policy expert at the European Centre for International Political Economy, "there is currently no expectation of a full free-trade agreement".

Negotiations between the two countries broke down under former US president Joe Biden, on issues including Britain's reluctance to open its borders to some American agricultural products.

- Delicate balance -

Britain must also juggle maintaining its relationship with the European Union, which remains Britain's largest trading partner by far.

"Trade flows between the UK and EU are almost three times bigger than those between the UK and US," said AJ Bell investment director Russ Mould.

In December, the month after Trump's re-election, British exports of goods to the United States rose by £500 million ($630 million), or nearly 11 percent, from the previous month.

"This could potentially be an indicator of traders adapting their behaviour ahead of any tariffs being implemented," the Office for National Statistics said, noting however that monthly data could be erratic.

One of Trump's longest-serving economic advisers, Stephen Moore, told the BBC in November that Britain should align itself with the American "free enterprise" economic model over that of Europe.

But Starmer has rejected that Britain has to choose between its allies.

"The national interest demands that we work with both," he said in December.

Since Brexit, the UK has formed trade agreements with the European Union and other European states as well as countries further afield such as Australia, New Zealand and Singapore.

It also joined the Trans-Pacific Partnership and restarted stalled trade talks with India.

For Bain, at the Chambers of Commerce, "Stronger trade with the US does not mean that our relationships with the EU, China and wider Asia-Pacific region must take a backseat."

T.Suter--VB