President Trump and Keir Starmer had their first phone call since the inauguration, discussing trade and a meeting of the two leaders "soon". With Trump calling the Prime Minister "a very good person", how hopeful can the UK be of a strong relationship with the new White House? This after Trump threatened sweeping tariffs on Latin American ally Colombia at the weekend and won compliance on migrant deportations within hours. We discuss the risks for the UK with Marco Forgione - Director General of the Chartered Institute of Export & International Trade. Hosted by James Woolcock and Caroline Hepker.
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I do. I mean, I've met him already three times.
Let's come over to see me twice.
Now I get along with him.
Well, I like them.
Alai's liberal, which is a little bit different from me. But I think he's a very good person.
I think he's a.
He's done a very good job.
Donald Chump on Air Force One, speaking about Keir Starmer, the Prime Minister. Feeling the love from across the Atlantic? How long will the good vibes last? Hello, you're listening to Blomberg UK Politics. I'm Caroline Hepke.
And I'm James Wilcock. Well, Carolyn, I come to the program with a cautionary tale for all the optimists today. Imagine the country widely seen to have warm relations with the US. It's run by its first left wing leader in recent history, and America sends more goods there than it imports, back running a trade surplus. This country thinks that if anyone was going to avoid trade tariffs from a Donald Trump, it would be them. But they take a firm stance on a moral issue and wham, within hours, they have the twenty five percent levee on all goods they trade to the US. Now, if you logged off over the weekend, you might not know that I'm talking about Columbia, which refused to allow two military planes carrying deported migrants to land.
Well, it's the first time in his term that Trump has followed through on his punitive threats, and judging by the results, as you say, James capitulation from Columbia, the hardline approach does seem to have worked. Columbia may be an uncomfortable example for Britain. It seems to disprove the belief that the UK government has held to that Britain's trade deficit with the States would insulate it from the sting of tariffs. Trump is seemingly pretty close and friendly towards Starmer for the time being, but how will he take the Prime Minister's attempts to coze up to the EU. It's a block the US president has called abusers and tease taris for so far, so how will he cope if Starmer then chooses to join the EUS PAN European Customs program, as leaders have indicated that they would be open to.
Well joining US. Now to discuss this one is Marco Forgioni, director General of the Chartered Institute for Export and International Trade. Well, you heard us there, Marco. It's buddy buddy for the moment between the UK Prime Minister and the US President. But there are these warning signs on the horizon. Where do you think the UK is going to sort of work out in terms of trade? How important are these nice words?
I think it's really important that the President has been very positive about the Prime minister. I think it sets a great tone for the ongoing conversations, and there's a clear commitment that the two will meet soon, either on the President's trip hopeful trip to the UK, or indeed the Prime Minister's trip to the US. So I think that the foundations are looking good. But as we've seen with the President in the last week or so, things can change very quickly.
Yes, And this idea that there would be a counter that there wouldn't be a tip for tat trade war because other countries would retaliate has surely been shredded by what happened with Colombia. It wasn't just the threat of twenty five percent trade tariff, an immediate emergency tariff that the US would impose on Columbia if it didn't accept these deported Colombian citizens migrants out of the US into the country, but that that would be followed up according to the plans from the US within a week with fifty percent tariffs if those migrants weren't accepted, and also the idea of a travel ban, of visa revocations for Colombian government officials going to the US, of emergency banking and financial sanctions. The list was really overwhelming, really against Columbia. This has surely shredded any idea that you could retaliate against the US.
It's clear that the President Trump administration will use all tools available to them to impose their will. You know, it's not just what's happened with Columbia. We've seen the action with Mexico and also with Canada, the ongoing positioning with regards to Greenland, and I think the whole world actually is now holding its breath waiting to see what actually is going to happen now. The President Trump before his inauguration did say that, you know, from day one taris would be imposed. Well, that hasn't happened, so I think this is part of a negotiation and I'm hopeful that the UK is able to position itself as a key collaborator and key alli with the US, whilst at the same time we need to bear this in mind. At the same time, the UK needs to develop a much warmer trading relationship with the EU. So that there are two challenges that Prime Minister Stama has looking at the UK currently, It's how do we build a relationship with President Trump that avoids punitive tariffs on UK goods and services and collaborate and build a closer trading relationship with the EU when we know very clearly that President Trump has his eyeset on tariffs on the EU, as he made clear in his speech to the DeVos World Economic Forum meeting.
You use the word they're hopeful, Marco. Now I think if anything, the weekend shows that hope isn't good enough. You've got to have hard economics reality. So what are the UK's bargaining chips on this table?
There's range. We have a very close trading relationship already. We are one of the largest investors into the US, just as the US is a key investor into the UK. But over and above trade, we are also an essential partner on global defense partnerships with the US, so it is more than just trade. It is about that comprehensive collaboration and partnership that's been nurtured over decades and das centuries. So I think that there is a much stronger foundation for the UK to build on than possibly some of the other trading blocks and trading nations. But you're quite right, Jase, we can't take anything for granted.
It all comes at a crucial time this week for the domestic economy. Chance of Rachel Reeves is due to give a major speed each this week, you know, trying to set out fresh plans for what has been so far sort of elusive economic growth. How important do you think trade is going to feature? Maybe in that conversation and in the equation to boost domestic growth.
Trade is essential. The only way we're really going to get the UK economy growing is by getting more UK businesses trading cross borders, getting more exports taking place. So you need more businesses trading overseas, and we need to increase the amount of goods and services that we're exporting. That's the only way we get the UK economy really firing and achieving its potential. But we have to bear in mind just reflecting on how rapidly changing the environment is. You know the news today with regards to the Chinese AI and the disruption that that's reaging on those large US tech companies and the implications for the US economy from that that wasn't foreseen even forty eight hours ago. So we are in a rapidly changing environment and the Chancellor has got to look at how she creates not just the fiscal environment for UK businesses to grow, to get that growth into the economy, but also how the government engages internationally to build that trade resilience. So it's a challenging time, but there has to be direct policy over the coming weeks that is going to lay the foundations for UK business growth, and it couldn't be more important if we look at UK business sentiment currently, which is at two year loads. In fact, there's been virtually no change since December. UK businesses aren't expecting any real improvement between now and April, and the December figures were the worst, as I said, for more than two years. So there's a huge amount that the government has got to do here to get a business sentiment growing, but more importantly to open up those overseas markets for UK goods and services.
Earlier, you mentioned the big elephant in this room here, and it is Europe. Every business seems to sort of say there's been a big hit, and for labor it's been a closed question. They say they're not revisiting the deal. They may try and get some sort of better deal. With all this push towards growth, with all these sort of changes in growth plans, with this major speech coming on Wednesday, if this Labor government in this Parliament isn't looking to revisit the Single markets, would you say their plans to growth aren't serious?
Marco, there are things that can be done even under the terms of the CCA currently under terms of the Brexit deal, that there's more that can be done to build a closer trading relationlationship, to remove some of the friction that exists in trade between the EU and the UK, and the UK and the EU. There's also over the past week the possibility of the UK considering aligning with the PEN Convention, the European Mediterranean Trading Group. So you know, I think that there's a lot that can be done without having to try and enter into a formal renegotiation of the TCA, which will take many many months, if not years, and will be incredibly complex. So what we're looking for is just.
To be clear for a moment things that can be done and things can be proved. Is great, but is your view that we should be trying for that or not? Because everything can be improved within the bounds of the agreements. But just as your opinion as a sort of director general of the Charter Insitute for Export International Trade, would re entering that kind of agreement be good for the UK and in the long run something a government should be trying to do or not.
So re entering the Customs Union or the Single Market is as much political as it is practical, and you know, it's not a straightforward possibility of just going back in on the terms that existed previously, so there would be a long period of negotiation, which would in itself be disruptive. I think what we need to be doing is doing what is practical right now and building a much closer relationship with our closest trading block. You know, our biggest collaborator is the EU. Biggest closest trading collaborator is the EU. And since Brexit, it's been clear the number of UK businesses, particularly the MSMEs and micro, small and medium enterprises trading with the EU has dropped dramatically and isn't increasing, and we've got real fears that we're going to see something similar for EU based MSMEs trading with the UK as the new rules come into play for the way in which the UK border operates. So we've got to be looking really practically now at what can be done to help and support businesses to trade into and out of the EU, and what can be done to remove friction that currently exists. And that's, as I said, before you start trying to enter into a renegotiation of the terms of the TCA.
Okay, Marcos, so trying to keep Britain's options open and build trade both with Europe and the US. Thank you so much for being with us, Marco four Journey as Director General of the Charged Institute of Export and International Trade on this most now vexing of questions how to handle the Trump administration, how to increase your own domestic economic growth without falling foul of potential tariffs.
That's it from us for today. If you'd like the program, don't forget to subscribe and give it five stars so other people can find it on Apple Podcasts, Spotify, or wherever you listen.
This episode was produced by Tia Adebayo and our audio engineer was Peter Nicolino. I'm Caroline Hepka.
And I'm James Wilcock. Will be back with more tomorrow. This is Bloomberg.