No 10 is scrambling for a Silicon Valley payday
It all turned on a decimal point.A shipping container of Aston Martins had been waiting off the American coast for the British government to strike a deal with the White House. The vehicle manufacturer was desperate for Keir Starmer to get Donald Trump to lower his 25 per cent tariff on British cars. In May, Trump finally agreed to drop the base tariff to 7.5 per cent. The only problem was that when the ship docked, a US customs official wrote down 75 per cent by mistake, leaving out the decimal point.
The error was soon corrected, and British exporters have since smoothed over the chaos of getting their goods into the world's richest market. But other embassies up and down Massachusetts Avenue are anxiously waiting for a phone call from the White House. Trump put out a new deadline of 1 August for several countries to capitulate to fresh deals before those big tariffs from the package he announced on 2 April – 'Liberation Day' – hit. The cycle of threats and negotiations feels ceaseless.
These pauses mean Trump is mocked by Wall Street with a teasing slogan coined by a Financial Times columnist: 'Trump Always Chickens Out', or Taco. Trump's penchant for cutting taxes on the rich and bombing the Middle East has led many commentators to muse he is 'Just Another Republican' (call them Jars, for short).
But don't confuse Trump hitting pause with ditching protectionism. Few Jars would raise tariffs with the alacrity that Trump has. While Ronald Reagan deployed import quotas in some sectors, that Republican president believed the 'freer the flow of world trade, the stronger the tides of human progress and peace among nations'.
Compare that to the fact that since Trump took office in January, the average tariff rate has soared from 2.5 per cent to 16.6 per cent. Those fixated on the constant delays and reversals forget that the general thrust of the policy is that tariffs are going up. Protectionism, like mass deportation, is one area in which this administration is ruthlessly consistent.
All of which means the UK's deal from June grows more attractive by the day. It sparkles when compared to Vietnam's 20 per cent base rate, or the 30 per cent Trump has said he wants the European Union to pay. The Business Secretary and President of the Board of Trade, Jonathan Reynolds, is hoping to visit Washington soon for further negotiations, or at least to court American business.
Photo ops to one side, Reynolds would likely be overshadowed by Ambassador Peter Mandelson and Starmer's éminence grise with business, Varun Chandra, the mysterious former Hakluyt chief who is frequently in town. All the politicking is leaving the Americans fed up of taking calls from British negotiators who are under pressure from No 10 to finalise awkward areas such as steel. Avoiding a cliff-edge for trade with other countries now takes precedence. Hadn't the Brits already got a deal, anyway?
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The problem is that there is still much to thrash out. I understand the Trump administration is pushing for the NHS to charge UK providers more – for pharmaceuticals, for instance – in order to make American firms more competitive. Then there is the crowning deal on technology: the one part of these negotiations that isn't just mitigation but could actually advance Labour's governing agenda.
Starmer and Rachel Reeves see an open invitation to Silicon Valley's tech companies as the ladder out of the country's terminal decline. Britain's saviour, in their mind, will arrive in robotic form. And if the options are either Chinese and American, then Labour will look west.
Nonetheless, the deal is proving tricky to reach. I hear the hold-up is end-to-end encryption. The Washington Post reported in February that the UK government was trying to force Apple to open up users' encrypted data, including that of non-British citizens. But JD Vance, the US vice-president, who is negotiating with Mandelson, has resisted, backing the tech companies, ever keen to protect his old Valley buddies.
Vance's position denudes the argument that these firms are apolitical, as if there is no cost to letting foreign companies become gatekeepers for the digital systems on which the UK operates. Vance clearly views these companies as American – does Labour?
Remember it was Vance who refused to sign the communiqué at the Paris AI summit in February to protest against over-regulation. The UK dutifully followed suit. The government's claim that this had nothing to do with the American position should elicit a small chuckle.
Look also to the tech-optimist, Innovation Secretary, Peter Kyle welcoming Google into the civil service last week. Much as the software company Palantir did during the pandemic, Google said it would provide its services to the UK for free, which meant the deal did not go out for tender. A marriage between Whitehall and Silicon Valley has become the mission by which this government wants to define itself.
But a comprehensive tech deal with Washington remains elusive. The specific content is confused and ambiguous. The pressure on the ambassador, who always has one eye on the growing fissures back in Westminster, is mounting. On technology, the Brits are still circling off the coast, waiting for an agreement to be struck.
[See more: Trump is serious about getting tough on Putin]
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