As expected, the recent G20 summit in China brought together the leaders of the most powerful economies in the world, many of whom are still trying to absorb the decision by the people of the United Kingdom to leave the European Union.
British Prime Minister Theresa May was the world leader who drew the most attention during at the summit. The Prime Minister explained that the “Leave” vote delivered by the British people was prompted by opposition to globalization and dominance by the wealthy and the elitist class. Prime Minister May promised that her government will crack down on those major corporations that use every trick in the book to avoid taxation, and she also mentioned that something needs to be done to the excessive pay granted to some corporate executives. While these comments were welcomed by the G20 leaders, they also pressed her about the future of global trade in the post-Brexit era.
United States President Barack Obama was one of the first to go on record with his thoughts on Brexit, which he thinks may be very difficult for future business relations between British and American corporations.
The Brexit Blues
Even before the G20 summit, President Obama had already hinted towards animosity building up against the new Brexit status quo. According to a mid-September report published by financial news outlet Bloomberg, the top trade negotiator at the White House has explained that the UK is no longer a business priority for the U.S.
Trade Representative Mike Froman is not happy with the UK’s decision to seek immediate trade negotiations with economic regions outside of the European Union. Until Brexit, the UK was a launching pad for the U.S. to access the European markets. What the White House would like to see is more of an effort by the UK to normalize trade relations with the UK, but this is not currently happening.
The UK is currently too busy trying to figure out how to manage debt and other internal issues; it has not yet gotten around to negotiating trade deals with the EU and the U.S., and this is not what President Obama had in mind when he learned about the outcome of the Brexit referendum. British Foreign Secretary Boris Johnson, a major Brexit supporter, has criticized President Obama’s position.
What Could Happen to American – British Trade Relations
By placing British companies at the back of the line, President Obama is risking a similar reaction from the UK.
It is important to note that the UK represents more than just the EU market to American companies. Being able to export goods that could be purchased by British consumers is also a major part of trade negotiations. With the current sentiment, UK leaders could actually influence British companies to slow down on doing business with their American counterparts.
The UK is no longer among the top five economies of the world; the country lost that distinction shortly after the Brexit votes were tallied; however, this does not mean that they are ready to stop doing business with the U.S. In fact, it could be safely assumed that the UK free trade agreements with the U.S. should come first.
While it is true that Brexit is bad for business, the U.S. should not be making things worse by snubbing the UK at this time.