Current position?
Prime Minister Keir Starmer, leader of the Labour party that won power in July, visited Washington at the end of February and came away hopeful an accord could be reached.
Talks have continued, with Business Secretary Jonathan Reynolds recently visiting Washington, while Starmer and Trump took up the baton in a phone call earlier this week.
It would follow Trump's announcement this week of imposing steep tariffs on imported vehicles and auto parts, vowing retaliation as trade tensions intensify and price hikes appear on the horizon.
Finance minister Rachel Reeves on Thursday said Britain would not seek to “escalate” trade wars, in contrast to strong comments by other major economic powers that hinted at retaliation in response to the auto-sector tariffs.
Downing Street has described a potential agreement as an “economic prosperity deal“, indicating it will fall short of a free trade deal ultimately sought by London.
“Some type of arrangement that might let the UK escape some tariffs is possible but it would not be a full-scale trade deal,“ Jonathan Portes, professor of economics at King’s College London, told AFP.
“But equally, it means we have less weight than as part of the EU and moreover we cannot afford to agree to anything that complicates our trading relationship with the EU,“ Portes added.
UK media has reported that London may scrap a tax on tech giants to avert US tariffs under Trump and clear a pathway to a trade deal.
His spokesman added that the UK will “make sure that businesses pay their fair share of tax, including businesses in the digital sector”.
Reynolds conceded that the digital tax is not “something that can never change or we can never have a conversation about”.
“If Trump keeps his word and the UK gains significant benefits as a result, then eliminating a tax could be a good deal,“ Henig told AFP.
“That, however, is quite a gamble.”
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