(Bloomberg) --
UK officials have warned ministers in the Labour government that previous trade talks with the US under Donald Trump were held up by his offer on tariffs, unwillingness to engage on climate-related issues and disagreements over access to public procurement markets.
Written advice prepared by civil servants for Labour ministers in the Department for Business and Trade cautioned that significant differences remained after the five rounds of talks on a free trade agreement held between the UK’s previous Conservative government and the Trump administration in 2020. The advice, seen by Bloomberg, reveals the extent of disagreement between the two sides, which had not been made public.
The UK completed five rounds of trade negotiations with Trump’s first administration in 2020, under then-prime minister Boris Johnson, before US President Joe Biden put them on ice after coming to power in 2021. While those talks saw a broad agreement on many chapters, UK negotiators were some distance from securing an acceptable offer from the US on tariffs, which was seen as the main sticking point, according to the official advice.
The revelation provides a reality check after Trump’s victory over Biden this month revived speculation in Britain about the prospect of a US-UK Free Trade Agreement, which was framed as a key benefit of the UK’s departure from the European Union and could help offset the loss of market access to the country’s closest neighbors.
There’s also a difference in the tone of the relationship: Trump’s Republicans and Johnson’s Conservatives are both parties on the right with deep ties, and the president-elect had a personal rapport with the former premier, once calling him “Britain Trump.” While Trump and Prime Minister Keir Starmer dined together at Trump Tower in New York in September — with the then candidate calling the prime minister “very nice,” there have also been frictions. During the presidential campaign, lawyers for Trump accused Starmer’s Labour Party of “blatant foreign interference” and illegal foreign campaign contributions to Democratic presidential candidate Kamala Harris’ campaign, in a filing with the Federal Election Commission.
All of that means Starmer will have to be realistic about his chances of securing a better offer, officials familiar with the advice said.
The Department for Business and Trade declined to comment on the document, saying in a statement that its ministers and staff “look forward to working closely with President Trump to improve UK-US trading relations to support businesses on both sides of the Atlantic.”
Trump’s promise to slap tariffs of as much as 20% on all goods imported to the US provides British officials with some urgency ahead of his inauguration in January: the US is Britain’s biggest export market, taking in more than £59billion ($75 billion) of UK goods and £129 billion of services in the 12 months through June.
Still, UK ministers have publicly expressed their optimism that the UK could negotiate derogations from Trump’s tariffs. Chancellor of the Exchequer Rachel Reeves has said the UK would make “strong representations” to Trump over the importance of free trade, while cabinet minister Pat McFadden said he looked forward to having a “positive and fruitful working relationship” with the new president.
The UK may benefit from the different treatment of trade statistics on either side of the Atlantic: American figures suggest the US had a physical goods trade surplus with Britain of about $10 billion last year — a balance that may deter the incoming Trump administration from potentially damaging the relationship with new tariffs. British figures, by contrast, suggest a smaller surplus in favor of the UK.
Privately, the doubts of British trade officials go beyond tariffs. The previous Trump administration was unwilling to agree to a UK request for its businesses to be given improved access to US government procurement markets, including those of federal and state-level entities, according to the advice to ministers. American negotiators pointed instead to examples of other trade deals it had signed, which the UK considered weren’t ambitious enough.
UK officials were disillusioned by their American counterparts’ offers on reducing barriers to trade in goods, including measures such as product standards and conformity procedures, the advice showed. The US also continued to present the United States–Mexico–Canada Agreement, a trade agreement signed in 2020, as a blueprint, but the UK rejected that text as insufficient on areas including climate.
That will be a particular problem for Starmer, who vowed in Labour’s manifesto to make the UK a “clean energy superpower” and on Tuesday ratcheted up the UK’s ambitions to cut emissions by unveiling a new target. Trump is a skeptic of action to fight global warming, calling climate change a “hoax,” and summing up his energy policy as “drill, baby drill” during the election campaign.
There’s also uncertainty on a controversial measure known as investor-state dispute settlement. Officials said it was not clear during the previous rounds of negotiations whether the US would insist on this measure, which would allow the UK to be sued by US investors if it legislated in a way that could be seen as damaging to their UK assets. For example, if the UK introduced new green targets which affected oil and gas assets held by US investors, that could leave the government vulnerable to a legal challenge.
Despite the hurdles raised by officials, negotiations between the UK and US could be easier from a legal perspective this time around, said Aline Doussin, a partner in the global regulatory practice of law firm Hogan Lovells. That’s because the UK has now fully left the European Union, after the Brexit vote in 2016 led to years of tortuous negotiations, with Britain formally completing the divorce at the end of 2020.
That means that when the US-UK trade talks were going on during the previous Trump administration, Britain’s relationship with the EU “was all very unclear,” Doussin said. “The reality today is very different. We are in a potentially unique situation with a different trade reality that could lead to more leverage on the UK side to achieve something that is more favorable than what the EU 27 will have.”
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