US Drops Hint to UK: Better Not Brexit
The UK should expect the US to impose the same tariffs as now apply to China, Brazil and India, should it opt out of the European Union, Michael Froman, the US Trade Representative, told Reuters October 28.
British voters will decide before the end of 2017 whether to remain in the EU. Proponents of the British exit – or Brexit – argue that the UK would fare better under separate free trade agreements (FTAs) with its trading partners.
But the US is “not in the market” for FTAs with individual nations, according to Froman.
“We’re building platforms … that other countries can join over time,” Froman is quoted.
“I think it’s absolutely clear that Britain has a greater voice at the trade table being part of the EU, being part of a larger economic entity.”
How heavily should this warning weigh on British voters? Here’s what the trade data shows about the trade relationship that would be jeopardized.
As Reuters points out, the US is Britain’s biggest export market after the EU, buying more than $54 billion in goods from the UK in 2014.
As our data shows, the US and the UK rank among the top 10 nations in trade. The US is the top market for UK exports and ranks third among sources for its imports, behind fellow-EU member Germany and China.
The UK has been the fifth most valuable market for US exports, and the sixth to seventh (switching places with South Korea) leading source of US imports, over the last five years.
Here’s the current data on the top products in trade between the two countries:
The Reuters story points out that the US is the UK’s second-biggest market for cars … behind the EU. (Our data on individual countries’ trade shows the US ranked first by value, accounting for 17% of exports in this product category in first-quarter 2015.) The imposition of a 2.5% tariff by the US on British cars might well result in fewer Americans buying Land Rovers.
Whether this is enough to deter British voters from choosing to leave the EU remains to be seen.
Date posted: November 2, 2015