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LONDON — The U.K. is growing tired of playing nice in its long-running trade dispute with the U.S. over steel — but playing nasty could backfire.
International Trade Secretary Anne-Marie Trevelyan traveled to Washington last week to urge her counterparts to lift the punishing national security tariffs on steel and aluminum that former President Donald Trump imposed in 2018.
So far, the gambit appears not to have paid off.
Trevelyan has faced growing pressure at home, after convincing those eager to retaliate to give her the chance to take a softer line. She noted, before leaving Washington, that the U.K. is prepared to retaliate further.
“We have been clear all along that resolving this dispute is the right thing to do,” she said. “It will benefit workers and businesses on both sides of the Atlantic, and would remove the need for the U.K. to levy retaliatory tariffs on U.S. goods.”
There are already some U.K. tariffs on items like Bourbon whiskey and Harley-Davidson motorbikes. Those could be increased. But the U.K. could target other areas too, with some in the trade department floating U.S. wine as an option.
The question is whether threatening Washington will work. For its part, the EU threatened to double its retaliation tariffs over the steel issue, and after some months Washington relented. But the EU is a massive trading bloc, whereas after Brexit, the U.K. is a single nation all alone.
“The idea of the U.K. threatening the U.S. with a heightened trade conflict is utterly preposterous,” said David Henig, co-founder of the U.K. Trade Forum. Business figures also scoff at the idea the U.S. would take much notice of sectoral tariffs.
However, DIT insiders argue that U.S. trade with Britain is significant enough for tariffs on the right sectors to prompt business pressure that could get the ball rolling in Washington.
Even if that were the case, escalating the row could further sour relations between the two sides which the U.K. government is reluctant to do, as it still hopes for a wider trade deal eventually.
In Washington, there’s skepticism. Tan Albayrak, a DC trade lawyer, said the post-Brexit commitment to a wider trade deal, and the desire for the Biden administration to rebuild ties with the EU following the Trump era, meant he did “not anticipate that the U.K. would move ahead with that threat of increasing retaliatory tariffs on the U.S.”
Washington seems so disinterested in a free-trade deal, that Britain will want to tread with caution.
After her meeting with Trevelyan, U.S. Trade Secretary Katherine Tai remained noncommittal about when talks on an agreement might resume. However, some expect Tai to come to Britain next month, and there are even rumours Dan Mulaney, who led the now dormant FTA negotiations on the U.S. side, could also make an appearance in London in the spring.
Heated steel
Despite hoping to leave Washington with a timetable for the steel negotiations to begin, Trevelyan didn’t even get a response to her invitation for Commerce Secretary Gina Raimondo to visit London next month to discuss the issue further. She is said by U.K. officials to be confident, however, that the visit will go ahead.
The row will become all the more fraught next month, when the same tariffs are eased for the EU, meaning the bloc will have a competitive advantage over Britain.
It was insulting enough that the U.S. negotiated on the issue with Brussels without coming to the U.K. for talks — but seeing the continent benefit from favorable treatment while the so-called “special” partner of Washington gets left in the cold is harder to swallow.
Pressure from the political opposition is to be expected. Shadow International Trade Secretary Nick Thomas-Symonds said it was “extremely disappointing” that Trevelyan failed to return from Washington with a deal. “Time is running out,” he argued, adding that the Conservative administration “must stop letting down our steel communities.”
There is trouble on her own side too. A number of Conservative MPs in steel-manufacturing seats are becoming agitated about the lack of progress, and are starting to increase the pressure on the government.
A consultation on the possible next moves was returned in the summer, but the trade department has been sitting on it, hoping Washington will play ball.
The U.S. might pay attention if Britain moved over threats to unilaterally suspend post-Brexit trade rules in Northern Ireland over it’s disagreements with Brussels — something U.S. President Joe Biden has warned against for fear it would put peace in the region at risk.
The U.S. is so averse to such a move that, ahead of the trade secretary’s trip, a memo was leaked warning that Washington will not discuss the steel issue until Britain backs down on threats to suspend the Northern Ireland agreement.
Some argue the continued steel tariffs, in fact, put more pressure on the fraught trading picture involving Great Britain and Northern Ireland. Trevelyan is said to have put that argument to her U.S. counterparts, which could be interpreted as a threat: Lift these tariffs or the U.K. will be more likely to suspend Brexit trade rules.
Ministers argue the two are not linked and insist, even in private, that the U.K. would not use the protocol row as leverage against Washington.
Henig said the suggestion made little sense because it would also amount to “threatening the EU, and collectively that is two-thirds of our trade.” He added: “The government needs a pretty urgent dose of reality.”
Source: Politico
