Trump's Criticism of May's Brexit Plan Zeroes In on Trade Reality

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President Donald Trump, left, and British Prime Minister Theresa May held talks in the U.K. on Friday.

President Donald Trump, left, and British Prime Minister Theresa May held talks in the U.K. on Friday.


Photo:

I-Images/Zuma Press

LONDON—

Donald Trump’s

​embrace​of a possible U.S.-U.K. trade deal,​on Friday reversed his earlier claim that British Prime Minister

Theresa May’s

Brexit plan will make such a pact impossible.

But the U.S. president was right the first time: Mrs. May’s vision of a divorce that leaves the U.K. tightly bound to the European Union will make a solo deal with Washington an insurmountable challenge.

Her plan seeks to maintain frictionless trade in goods with the EU after Brexit.

It would do this through a special customs arrangement with the EU and by keeping British product regulations fully aligned with those set by the bloc.

“If they do a deal like that, we would be dealing with the European Union instead of dealing with the U.K., so it will probably kill the deal,” Mr. Trump said in an interview with British daily The Sun.

At a press conference Friday, Mr. Trump reversed his position, saying he looked forward to finalizing a U.S.-U.K. trade deal once Britain leaves the EU. “We want to trade with the U.K., and the U.K. wants to trade with us,” ​he said.

Mrs. May’s proposal is a long way from being a fact. It has to be negotiated with the EU, which may well reject it.

A U.S. trade deal would be important for Britain. The U.S. is its biggest national trading partner.

Such an accord would be less important for the U.S. The U.K. is America’s sixth most important trading partner, accounting for just over 3% of its trade. In an anomaly revealing discrepancies in national trade data, U.S. figures report a U.S. trade surplus with the U.K., while British figures show a U.K. surplus.

Mr. Trump’s interview upset many in the U.K. by undermining his host on the day he arrived in the country. But the message wasn’t wrong, trade specialists say.

“Fundamentally, it’s the correct analysis,” says Sam Lowe, a trade expert at the London-based Centre for European Reform, a pro-EU think tank. “The closer the U.K. remains to the EU, the more difficult it becomes to do a trade deal with the U.S.”

There are two big reasons why Mrs. May’s proposal would sink prospects for a U.S.-U.K. deal, Mr. Lowe says. The first is that the customs arrangement would in effect keep U.K. tariffs the same as the EU’s for a significant period post-Brexit.

The second is that aligning product regulations with the EU—and in particular rules governing food and farm products—would continue to bar many American farm products, like chlorine-washed chicken, hormone-fed beef and genetically modified grain, from the U.K. market.

No U.S. trade negotiator would contemplate a trade agreement that didn’t cut tariffs, for example on cars and food, or one that didn’t open up the British market to American farm products. Neither would a deal that excluded these elements secure support in the U.S. Congress.

In deciding to leave the EU, the U.K. unwittingly made itself the battleground for a strategic fight between the two big setters of regulation in world trade: the EU and the U.S.

In financial services, the U.K. may be big enough to become a rule setter itself. But in trade in goods, its modest importance means it will largely have to accept rules set down by others.

Being able to set the rules for world trade delivers economic clout to the rule setter. Probably only in this area can the EU be considered a superpower, and its global reach has been growing.

Both it and the U.S. see the emergence of a major competitor in China. So if the U.S. can pull the U.K. into its regulatory orbit and away from the EU that would be a big win for Washington.

Write to Stephen Fidler at stephen.fidler@wsj.com

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