The UK must soon decide between aligning with the European Union or the United States, trade experts have warned, as fears rise over the prospect of a global trade war.
Pascal Lamy, the former head of the World Trade Organization (WTO), stated that the UK’s economic interests are more closely aligned with the EU, especially in the face of an increasingly protectionist US under a re-elected Donald Trump.
Lamy’s comments come amid concerns that Trump’s new administration could impose severe tariffs on UK exports, possibly as high as 20%. Stephen Moore, a key Trump ally, has suggested that the UK must reject the EU’s “socialist model” if it hopes to secure a free trade agreement with the US.
However, Lamy disagrees, arguing that the UK’s economic ties with Europe are far stronger than those with the US—three times larger, in fact.
“In trade matters, you have to look at the numbers,” Lamy said. “The trade relationship between the UK and Europe is three times larger than with the US.
This is a very structural inter-dependence.” He added that the UK’s socio-economic model aligns more closely with the EU’s than with the “brutal version of capitalism” espoused by Trump and business magnate Elon Musk.
Lamy believes that any attempt by the UK to distance itself from EU standards, especially in areas like agriculture and veterinary regulations, would undermine its long-term economic stability.
“My answer is that the option to unite politically, economically and socially with the US and not with Europe makes absolutely no sense,” he said.
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This growing divide comes as UK Prime Minister Keir Starmer prepares to attend the G20 summit in Brazil, where he will meet world leaders, including President Xi Jinping of China.
Experts predict that the US will push both the EU and UK to follow its lead on tariffs, especially on imports from China, but both Europe and the UK are expected to resist these pressures for their own trade reasons.
The UK government is now prioritizing the development of a new trade strategy as it navigates the complicated landscape created by Trump’s re-election and the shifting global economic order.
Former British ambassador to the EU, Ivan Rogers, also warned that any trade deal with the US would likely force the UK to make difficult choices between US and EU standards, particularly in agriculture and veterinary regulations.
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However, João Vale de Almeida, former EU ambassador to the UK, believes there may still be a way to strike pragmatic deals with both the US and the EU.
“Given that a fully-fledged trade deal with the US is not possible because of agricultural issues, and an EU deal is limited by UK red lines, any deals will have to be limited. So there may be a way through,” he said.
With the global trade landscape rapidly evolving, the UK faces a delicate balancing act between its traditional European allies and a new, more unpredictable US administration under Trump.