Hey, everybody. Peter Zeihan here, coming from a snowy Colorado. Today we’re talking about trade talks. Most of what has been going on this last year is not what I would consider to be an actual trade discussion. If you remember back to April of 2025, Donald Trump announced tariffs on really everybody and then said he was starting trade talks with all of them, 200 different countries at the same time.
But at the same time, the US Trade Representative’s office, which is the office that handles trade talks, was never staffed out. So from the point of view of how we negotiated every trade deal to this point, no real talks had begun. Trump did not personally oversee any of them. He subbed them out to say the Treasury secretary, the Commerce Secretary, who were usually not involved in trade talks.
And so basically all it was was a negotiation about that specific number that was announced back in April of what the overarching tariff would be, and a couple of side things patched on to it. And at this point, none of those deals have been ratified by anyone. So we really haven’t really started. There is one exception, and that’s the United Kingdom now, the United Kingdom, ever since Brexit, which is almost a decade ago, has been desperate to get some sort of trade relationship with the United States that is more formalized.
The reason is pretty simple. The demographics are aged. They’re losing consumption based. They need an export market. And they used to have the European Union, but they don’t have it anymore. The question then, is if it’s going to be the United States, because it’s really the only large economy that’s close enough to matter. What does the United States want from the United Kingdom in order to get that?
And as the Brexiteers have discovered, the United States takes a very hard line in meaningful trade talks, especially if you’re like the United Kingdom and you really don’t have any other options. So the news that has come out in just the last few days is something that the Brits are really cheesed off about, and that the United States is striking an uncompromising position under Donald Trump on regulation.
And this isn’t new. The Trump administration did this the first time around. The Biden administration held at that position the idea is that if you have regular regulatory unity, you basically achieve market capture, because all of a sudden your country is now measuring everything and regulating everything in the same way as the country you’re trying to partner with.
And that makes it harder for other countries to have trade deals with you. So this is about pulling the United Kingdom out of the European Alliance of Trading Countries and locking them into the NAFTA system. The Brits are resisting this, particularly around things like food safety, because they realize that once you go down that path, you’re pretty much locked in.
And the Brits would prefer to keep their options open. But at the end of the day, the Brits are a mid-sized economy trapped between two major blocs, one of which has long range consumption options because it’s the younger population in Mexico and the United States, and one of which doesn’t because the European Union is much further along in the aging process demographically.
So if there is going to be a meaningful US UK trade deal or a NAFTA UK trade deal, this is part of it. Now there are other things the United States is going to insist on. For example, in aerospace, the United Kingdom is going to have to leave the Airbus family and join Boeing on agriculture. They’re going to have to accept US agricultural exports in volume, which will probably drive most farmers and producers in the United Kingdom out of business.
On automotive, they’re going to have to go with American emission standards instead of European and so on and on and on and on. And then, of course, on finance. London, just goes away and New York absorbs it all with maybe a little bit for Toronto. So there’s a lot to swallow here. But the United Kingdom has come to this negotiating table with very little on offer.
I mean, yes, it’s a market of 60 million people. Yes, that is significant. But at the end of the day, the Brits are going to have to bend to either Brussels or Washington and it’s not going to be comfortable. But their alternative is to try to go it alone. And that is something that is just not going to fly.