In 2018, the United States was the UK’s largest single trading partner, with exports and imports worth £190.5 billion (roughly $247 billion) – a figure equal to 14.7 percent of the UK’s total trade.¹ Thus, businesses active in either country – including those in the food and beverage industry – have a strong interest in how Brexit will change the U.S.-UK trading relationship. But U.S.-UK trade does not take place in a vacuum – Washington will consider its relationship with the United Kingdom against the background of major changes taking place in U.S. trade policy. Those changes may be briefly summarized as follows:

The United States is revising the rules of trade with major partners. Since President Trump entered office, the United States has reached new trade deals with Canada, Mexico, Korea, Japan, and China. The administration’s new United States-Mexico-Canada Agreement (USMCA) recently passed the Democratic-controlled House of Representatives by an overwhelming vote of 385-41. Given its strong support on Capitol Hill, the USMCA will likely become a template for future U.S. trade deals.

The United States is willing to take aggressive actions on trade. Recent negotiations between the United States and its trading partners have been marked by U.S. tariffs – either threatened or imposed. Despite the recent “phase one” deal with China, many U.S. tariffs on Chinese imports remain in place. The recent performance of the U.S. economy – and the president’s success in obtaining new trade terms – has bolstered the administration’s confidence that aggressive trade actions can provide critical leverage in trade negotiations.

The United States is focused on bilateral talks. Recent U.S. administrations were extremely interested in multilateral trade negotiations – whether in the WTO, the Trans-Pacific Partnership, or some other forum. But the Trump administration has concentrated on bilateral negotiations. Even when negotiating the USMCA, the administration reached a deal with Mexico a month before it completed talks with Canada.

But not everything has changed in U.S. trade policy. Agriculture remains a major priority for U.S. trade negotiators. In the USMCA, as well as in recent trade deals with Japan and China, U.S. negotiators were very concerned about obtaining better market access for U.S. agricultural goods. The U.S. government remains particularly concerned about rules that block U.S. agricultural exports.

Applying these developments to Brexit, members of the food and beverage industry should prepare for the following developments:

1. The United States will aggressively pursue trade negotiations with the United Kingdom. The Office of the United States Trade Representative (USTR) has already done the preliminary work with Congress necessary to begin such negotiations, and there is broad bipartisan support in Washington for a free trade agreement with the United Kingdom. If these negotiations are successful, the United Kingdom would be the largest economy to have a free trade agreement with the United States.

2. The United States will likely be particularly interested in market access for food and beverage products. Agricultural exports are always important to U.S. policymakers, and U.S. exporters of agricultural products have long been frustrated by regulatory barriers that have limited sales to Europe. U.S. negotiators will likely seek improved market access for American food and beverage products.

3. Talks between the United States and the United Kingdom will be heavily influenced by the ongoing Brexit negotiations. A key issue for U.S. negotiators will be how much access American exporters have to the UK market compared with exporters in other countries – particularly the European Union. Obviously, to the extent U.S. exporters are disadvantaged vis-à-vis EU exporters, any potential deal will necessarily become less attractive to the United States. Thus, anyone concerned about the future of U.S.-UK trade will also want to monitor the negotiations between the United Kingdom and the European Union.

¹ See United Kingdom Department for International Trade, UK Trade in Numbers (Sept. 2019) at 7, available at assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/836787/190924_UK_trade_in_numbers_full_web_version_final.pdf (last visited 13 January 2020).