Concerns about torpedoing trade negotiations ... Trump shocks Johnson "friend" and hints at tax war

Al Jazeera Net - London

Contrary to what was expected, the path of the trade agreement between the United States of America and Britain will not be furnished with flowers after the emergence of a new obstacle that prompted Donald Trump to wave the imposition of trade sanctions on some British products, in response to London's announcement of its intention to impose a tax on major American technology companies.

The recent Davos conference was a decisive stop in which the Washington and London agreement appeared on the outlines of the trade relationship between the two countries after the exit of the United Kingdom from the European Union, but they differ in many details that may delay the signing of the trade agreement, which British Prime Minister Boris Johnson relies heavily on to cover On the vacuum left by his country's withdrawal from the largest unified commercial market in the world.

And Washington's need to conclude a commercial agreement with Britain is no less than the latter's need for this deal, because it has economic and political importance in the first place, because the American President wants to conclude this agreement before entering the election campaign so that he can boast that he was behind the signing of "the largest trade agreement in The world "may be worth about $ 800 billion, according to estimates by the White House.

Waving a new trade war
US Treasury Secretary Stephen Mnuchin did not hesitate to brandish the possibility of imposing new taxes on British cars destined for the American market, if Britain insisted on imposing a tax on American technology companies (Google, Facebook and Amazon ..) similar to what was decided by other European countries such as Germany, France and Italy.

In the same language of challenge, British Treasury Secretary Sajid Javed replied that his country was determined to impose a tax on these companies by next April, and the value of the tax is estimated at about 2% of the total income of US companies on the British market.

Britain knows that Washington is serious about its threat, and it is following the French model. French President Emmanuel Macron was forced to postpone the same tax on American companies after US sanctions on French wine imported on the American market, which amounts to two billion dollars annually, and Washington then retracts these sanctions.

The US administration hopes that waving taxes on British cars will be enough to not activate the tax on American companies, which was expressed by the US Treasury Secretary when he talked about close contacts between Trump and Johnson to solve this file.

The figures do not show that the British car industry may lose a lot if it is subjected to new American taxes, as British official data indicate that Britain's exports of cars to America do not exceed 17%, compared to 52.6% directed towards the European Union.

As for British imports of American cars, they are in the range of only 1.4% compared to 68.4%. Figures indicate that the US market is not the vital outlet for British cars compared to the European Union.

Nevertheless, the British fear that Trump will pursue the same policy with France with their country and before China with imposing taxes "indiscriminately" on a number of products and that it will not be limited to cars only, especially since this policy has proven from the point of view of the White House to be "effective" with China and France, which could scatter the trade agreement papers between London and Washington.

Different priorities
“We used to think that we have priority with our British friends.” With this blunt statement, the US Treasury Secretary responded to a statement by his British counterpart, who stressed that London’s priority is to reach an agreement with the European Union, because the matter is linked to a specific and tight timeframe that ends at the end of this year, otherwise it will be There is an exit without agreement.

Bloomberg expects that the possibility of Britain leaving the union without an agreement has become a "strong possibility", especially after more than one European official spoke of the "unreality" of reaching a trade agreement with Britain by the end of this year.

And some economic analysis believes that London knows the difficulty of reaching an agreement with the European Union, citing fiercely the European negotiators in concluding any trade agreement, as it took more than ten years to conclude this agreement with Canada and Japan, while negotiations are still pending with America.

However, the British government is trying to show that it is not in a hurry to conclude an agreement with America in the desire to obtain greater gains, especially after more than one American official revealed that Trump is very enthusiastic about concluding this agreement with the British.

British Treasury Secretary Sajid Javed believes that a trade agreement can be reached with the United States, possibly after the end of this year, which is the tone that will not appeal to Americans who want a deal in the coming months, specifically before the official launch of the American election campaign.

The goal of the US President is to hold this deal in his hands during the campaign as "the largest trade agreement in US history".

Economic returns and political gains
Trade exchanges between the two countries are estimated at about 240 billion dollars, a figure that Trump promises to quadruple to more than 800 billion dollars, knowing that the volume of trade exchanges with the European Union currently stands at 720 billion dollars.

The need for a trade agreement between Britain and the United States of America remains vital for both parties. For London, the agreement has huge economic returns that will offset what it will ridicule of leaving the union, especially with the possibility of leaving without an agreement.

As for Washington, it has political benefits that might appoint US President Donald Trump in his election campaign.

Economic circles in the two countries are awaiting the summit that will bring Johnson to Trump in early February at the White House, and the main topic on the table will be the trade agreement and resolving the dispute over the tax on American technology companies.