Blains Morning Porridge May 9th 2025 – UK / US not-a-trade deal is better that nothing
“Deal in haste, repent at leisure.”
The UK / US trade deal announced yesterday is what it is – a distraction. It’s half-baked, but better than nothing. It unravels some of the knots the US president has tied himself in, and will ease some immediate pressures on UK industry. It won’t change the likelihood Trump’s approach to global trade will trigger US stagflation.
One thing Sir Keir Starmer got absolutely right about the US/UK not-quite-a-trade-agreement in an unscripted answer to a journalist: “Britain is better off today than it was yesterday.” (As the papers all point out this morning, we’re in a worse state re US trade than we were in March!)
Otherwise, it was all a bit embarrassing watching Starmer smirk like a schoolboy just been given a gold start for “trying hard”, while Mandelson smarmed in the background. It was US political theatre, and the Brits in the room were just props in the Trump soap opera… a staged performance designed to show the American people how busy and globally admired their President is.
If the energy that’s been expended on explaining and analysing Trump’s trade policies had been more constructively employed these past 108 days – we’d have cracked nuclear Fusion by now!
Commerce Secretary Howard Lutnick tried to sell the deal by focusing the US audience on the $6bln the continuing 10% tariffs on UK goods will contribute to US revenues. Embarrassing. In reality, he’s well aware US consumers will still be paying higher prices, and margins will still tumble for UK auto-makers till a new equilibrium price is met. (Apparently Lutnick and UK trade minister, Jonathan Reynolds were critical working together to get the deal done.)
Trump and his minions might even be hoping the event will have fooled the Chinese, and will maybe even bounce them closer to a deal when negotiations start this weekend. It is unlikely Beijing will be much impressed. They don’t write books about the art of the deal – they do deals.
Yesterday’s UK / US should fool no-one. A President desperate to be seen doing deals just did another half-cock piece of political posturing. He claims he has enormous leverage over other nations, where leaders are desperate to “kiss my ass”, but the reality is he’s holding a very poor hand. Markets are beginning to realise there is no art of the deal… just bluff and bluster.
- Should Starmer have walked away from the incomplete deal? Definitely not.
- Could he have played Trump’s desperation for a deal harder? Probably.
- Does it expose Trump’s increasingly weak negotiating position? Absolutely.
- Was the UK shafted (as today’s acting Tory leader Kemi Badenough declared)? Nope.
- Did the deal avoid a potential jobs meltdown in the UK auto-sector? Probably.
- Should Donald Trump get a discount on a new Roller? Definitely not. He should not be allowed to own one.
Let’s give the UK trade team some credit; it was an “any deal is better than no deal” situation. They showed they had the capability to move fast and effectively to get something, anything, tied down…
The next country on Trump’s list, be it Japan, Korea, Brazil, Oz, or wherever should take note – Trump needs to do deals. He is desperate to do deals. There is blood in the water – these nations should take note, and press hard accordingly.
For all of Trump’s comments about the speed of the deal with the UK being down to Brexit, the reality is the UK now faces a stream of complex, potentially conflicted compromises to emerge in a better overall trade position in the wreckage imposed in Trump World.
The first priority will be taking what is a “framework” deal with the US and seeking to hammer down the details. That will be exceedingly difficult at a time when Team Trump will be focused elsewhere, desperately trying to sign up similar deals by early July when the 90 days tariff pause ends. Under Trump it’s unlikely we will achieve open borders or anything even close to the “full and comprehensive free-trade deal” Trump said he was negotiating, and the UK sought. It’s more likely to be one-off agreements and trade-offs on specific issues and goods. You want, you’ll accept…. You get.
There are limits to free trade with the US. The UK is highly unlikely to ever accept US hormone fed beef or chlorinated chicken. Although the future of the NHS is clearly in crisis, its equally unlikely US firms will be allowed to effectively run it – even if Palantir thinks it probably can!
The deal with Trump will have to be put in context of the much more important potential new post-Brexit deal/accommodation with Europe. The UK really will be a supplicant to that agreement, but is more likely to be dealing with adults in the room. Why more important? Because the UK’s best interests lie in ensuring the strength of European defence with a seat at the table – seated alongside nations with shared common purpose (even if the members of the EU fail to see that clearly enough.) Most Europeans want to see the UK re-engage, and that can be outside-in rather than full membership.
Then there are the dangers of signing over-hasty trade deals elsewhere. There is much comment about how India’s played a blinder in the trade agreement with the UK earlier this week – a charter for Indian firms to place Indian workers in the UK at much cheaper costs than employing Brits.
Apparently, and again according to Lutnick, one upside from the US deal is BA is about to buy a new fleet of Boeing Dreamliners. Are they sure? Just asking…. I better check who has got A350s across the pond.
Have a great weekend, and back to the day job…
Bill Blain
Author Morning Porridge
Founder Windshift Capital
Partner Shard Capital
