The Election and its Impact on US-UK Trade Deals

As the 2020 election approaches, what will come of Trump's trade deal with the UK? Read on to uncover the widespread impact of US trade deals in the UK come November.

Brexit 6

Since Donald Trump’s surprise victory in 2016’s US Presidential election, foreign trade has been at the forefront of American policy. The dissolution of NAFTA and retooling of existing agreements with China, the EU and the UK have topped President Trump’s first-term agenda. However, despite extensive negotiations, a comprehensive Trump trade deal with the UK has yet to materialise.

The fourth quarter of 2020 will be a pivotal time for UK-US trade. The much-anticipated US presidential election takes place 3rd November 2020, and 31st December 2020 marks the end of the Brexit transition period. Both events are highly likely to shape bilateral trade between the US and UK for years to come. Although both sides appear anxious to preserve US$1 trillion in foreign direct investment (FDI), 2.7 million jobs, and $247 billion (per 2019 figures) in two-way commerce, a formal Trump-UK trade agreement is unlikely by 1st January 2021.  

The Impact of US Trade Deals

One of the key drivers of 2016’s Brexit Referendum was the ability for the UK to craft trade deals free of European Union (EU) intervention. Over the course of the transition period, a new “Global Britain” has emerged. Negotiations with the World Trade Organisation (WTO) regarding a new schedule of commitments around goods, services and agriculture are under way. In addition, the UK crafted “continuity deals” with nearly 50 countries and territories, accounting for 8% of aggregate foreign trade as of June 2020.

Despite efforts from both sides, an official UK-US international trade pact is not yet in place. Although a long-term bargaining agreement with the US will support the UK’s post-Brexit economic success, circumstances may delay negotiations by months or years. In the meantime, UK leadership may be inclined to direct efforts toward dealings with the EU.

A Pre-Election UK-US Trade Deal Is Highly Unlikely

In the run-up to the 2016 presidential election, then- candidate Donald Trump campaigned on reforming US foreign trade. That meant preferential status for Britain and that the “UK will always be at the front of the line” when it comes to negotiating free trade deals.

However, proposed trade negotiations haven’t developed as planned. Repeated Brexit delays and tensions resulting from the Boeing/Airbus standoff have undermined progress. In response to the Airbus issue, the US placed tariffs on a collection of UK exports, headlined by scotch whiskey. According to UK Trade Secretary Liz Truss, the levies on scotch were “unacceptable.” Even though the tariffs paled in comparison to those placed on many Chinese exports, the Boeing/Airbus situation significantly set back British-American trade.

According to US Trade Representative Ambassador Robert Lighthizer, a sweeping UK-US trade deal is “almost impossible” by Election Day. When considering the risk of Trump not winning a second-term and the onset of the COVID-19 pandemic, it stands to reason that the process of ratifying an agreement will drag well into 2021, or beyond.

Regardless of whether or not a deal comes to pass, volatility in the USD, GBP, and other US/UK assets is sure to ensue throughout the negotiation process. To capitalise on the exchange rate volatility, you can open and fund a trading account at City Index in as little as five minutes. With City Index's premier brokerage service suite, you are always in position to engage the markets from a position of strength.

Will EU-UK Trade Relations Supercede Talks with The US?

Although Lighthizer is optimistic that a UK-US trade deal will eventually get done, he views UK-EU talks as being key to the US position, noting that “what [the UK] give[s] Europe will affect what we get.” While Lighthizer’s comments were made somewhat tongue-and-cheek, they do suggest that British-European commerce will be a key component of any Trump trade deal with the UK.

Agricultural Stumbling Block?

One of the key stumbling blocks of the ongoing dialogue has been the “chlorinated chicken” debate. Since 1997, the EU has banned the washing of chicken products in chlorine, a common practice in the US poultry industry.

Accordingly, the UK government has denied that it would accept lower food standards in the post-Brexit era, jeopardising the entirety of US agricultural exports to the region. Britain’s Environmental Secretary Michael Gove has stated that chlorinated chicken will be a “red line” in forthcoming negotiations with the Trump administration. As trade talks continue post-Brexit, Britain’s commitments to EU agricultural standards will be an integral part of any Trump-UK trade agreement.

From a financial standpoint, Britain is motivated to promote a positive commercial relationship with the EU. As of 2020, UK-EU trade measures more than twice the size of UK-US trade. Certainly, Britain’s commercial affiliations with the EU will be important to preserve.

Is A US-UK Trade Deal Worth It?

There are two questions at the core of every trade deal: Who benefits? And by how much? For the UK, a comprehensive agreement with the US may not bring any extraordinary value. Initially, the Department for International Trade (DIT) estimated that a Trump trade deal with the UK would bring in £3.4 billion across the first 15 years. These figures were largely retracted, and the British government admitted that the economy may grow by only 0.16% through 2035 under a comprehensive US-UK trade deal.

In addition to moderate economic growth, the social impact of a UK-US trade deal may prove negative. According to a Newsweek poll conducted by Redfield & Wilton Strategies, a majority of UK adults viewed negotiations with the Trump administration pessimistically. The online poll targeted 1500 Britons over the age of 18 living throughout the UK. Results showed that 53% believed the Trump administration would not “treat the UK fairly and respectfully in trade negotiations.” Conversely, only 27% thought that dealings would be on the up-and-up. While the merits of such polls are debatable, Redfield & Wilton’s data suggests that there may be a general disdain toward President Trump’s international trade tactics.


As the post-Brexit era approaches, global markets aren’t prepared for the escalation of UK-US trade tensions. The COVID-19 pandemic and the impact of the US-China trade war on the financial markets have been a significant global economic setback. At this point, the establishment of a strong Britain-America partnership is integral to future prosperity.

Given the complexities of international commerce, accurately predicting the future of geopolitics can be a daunting task. Rest assured that no matter how UK-US trade turns out, there are potential benefits from trading the British pound, US dollar, and other UK/US assets. For more information on how you can get in on the action, one of our market professionals today.

More from Forex


This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit for the complete Risk Disclosure Statement.

Important Notice:

Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.