A new trade agreement between the United States and the United Kingdom, encouraged by President Donald Trump, is expected to shield the UK from some of the economic uncertainty caused by global trade tensions.
The proposed deal signals a shift in White House policy, with the US recognizing that trade between the two countries is broadly balanced. Unlike other trading partners that Trump has accused of “ripping off” the US, the UK is not viewed as a major offender in the president’s eyes.
However, this agreement is not the comprehensive free trade deal that was widely debated during the Brexit era. Instead, it is a narrower “economic deal” focused primarily on the technology sector.
Tech at the Heart of the Agreement
Prime Minister Keir Starmer has framed the agreement as a way to deepen technological collaboration between the two countries. The UK hopes to position its London-Oxford-Cambridge tech hub as a key partner for Silicon Valley, much like London’s financial sector serves as a global counterpart to Wall Street.
US Vice President JD Vance, a strong ally of big tech, will lead parts of the negotiations, underscoring Washington’s focus on the digital economy.
However, there are sticking points. Trump’s administration has been vocal in its opposition to the UK’s digital services tax, which imposes a 2% levy on large tech firms’ revenues from social media, search engines, and online marketplaces. The US wants to curb this trend globally, fearing that more countries will follow suit.
Additionally, US officials have raised concerns over the UK’s Online Safety Act, which forces tech companies to regulate harmful content on their platforms. Some in Washington argue that this stifles free speech, and negotiations may touch on how these regulations affect American firms.
Broader Trade and Political Challenges
While a formal agreement on tech cooperation appears likely, other trade issues remain more complex. The UK government, which is already working to ease trade frictions with the EU, is unlikely to make concessions on food standards or NHS pricing, two sensitive topics in previous trade discussions.
Moreover, there are political risks. Trump’s administration has a history of shifting positions, and past Oval Office assurances have sometimes been undermined by subsequent US trade policies.
The broader question remains: Can the UK maintain neutrality in an increasingly volatile global trade landscape? While Starmer insists that Britain does not have to choose between the US and Europe, economic realities could make that stance difficult.
Some experts suggest that the UK is attempting to adopt a role similar to Switzerland, carefully balancing between major economic powers. However, with global trade wars looming, maintaining such a delicate position may prove challenging in the months ahead.
