Could Trump’s UK deal start a golden age of free trade?

We had the shock of “Liberation Day” when punitive tariffs were levied on imports from virtually every country in the world. That was the destructive part of Donald Trump’s trade war. Now we enter phase two: trying to put things back together again.

The announcement of a trade deal with a “big and highly respected country” (believed to be the UK) on Thursday morning is significant not just in itself but because Trump added the suggestion that this will be “the first of many”. His strategy has become clear: last month’s tariffs were shock therapy intended to precipitate a round of trade deals that would rebalance trade in the US’s favor. They were not intended as a permanent fixture – at least not at the levels announced on April 2.

We don’t know the details yet. It may turn out that the US-UK deal is so weighted in the US’s favor that other countries and trade blocs like the EU are repelled by the prospect of doing such a deal themselves. It wouldn’t be the first time the UK has struck a one-sided deal with a Republican president: back in the 2000s the then UK Prime Minister Tony Blair was accused of negotiating a one-sided extradition treaty with the George W. Bush administration that made it easy to extradite criminal suspects from Britain but a lot harder in the other direction.

The current Labour government has similarly been accused of selling out British interests. Just this week, the UK announced a trade deal with India that many have complained is weighted against Britain, allowing Indian nationals to work in Britain for three years without paying National Insurance contributions – taxes that are supposed to fund work-related benefits and pensions. There has also been the controversy of the Chagos Islands (containing the US airbase at Diego Garcia), which Keir Starmer’s government has decided to hand to Mauritius and then lease back in a deal which could cost the UK £9 billion over the next century – all this when Mauritius’s claim to the islands is somewhat tenuous.

On the other hand, the US-UK deal could turn out to be exactly what Trump is promoting it as: a deal that ends up liberating trade rather than constraining it. The early reaction of markets certainly suggested confidence that this will be a substantive deal of benefit to both sides.

Back in April, the world seemed to forget Trump’s way of doing things. It became received wisdom that Trump really did want to burden the US economy with punitive tariffs that threatened to undermine much of its own industry. Among the biggest victims of blanket tariffs are always domestic sectors that suffer a sharp rise in costs thanks to the need to import raw materials and components. That received wisdom is now undergoing rapid reassessment as Trump adopts more conciliatory language and begins announcing trade deals.

Could this even be the beginning of a new golden age of free trade? That might sound like a naïve, contrarian idea. But what Trump has demonstrated is that when the will is there, trade deals can be negotiated very rapidly – in weeks rather than years, as is traditional. If the UK-US deal sets a precedent, it could just turn out that the ultimate outcome of Liberation Day is the opposite of what many feared: a far nimbler global trade system, and the possibility of a more open global economy.