As I write this, President Donald Trump is currently in England meeting with Prime Minister Theresa May and Queen Elizabeth. As usual, he has been all over the map with his accusations, walk backs and other ramblings.
According to Sam Meredith with CNBC, Trump was forced to walk back his criticisms of the Prime Minister he had spewed the day before in an interview with The Sun. Setting aside the fact he called his previous words “fake news,” one topic which was at the forefront of his press conference with May was the possibility of a free trade agreement between the U.S. and the United Kingdom. 
At the moment, there is no bilateral trade agreement between the two countries because Great Britain was previously covered by the provisions laid out in trade negotiations between America and the European Union. Since, the U.K. has decided to leave the EU and they are now shopping for free trade deals from any allies willing to talk.
Although Trump has not been an advocate for free trade agreements during the past few years, he has shown a clear desire to negotiate some sort of deal with our closest ally. In Meredith’s CNBC piece, Trump is actually quoted as saying they had a “tremendous opportunity to double, triple or quadruple” the economic interaction between the two nations.
Listening to this rhetoric, it would not be unreasonable to think the U.K. has been held back in some way by being in the European Union, and America can easily swoop to their rescue with some expansive trade agreement. This, unfortunately, simply is not the case.
I will always be one of the first people to say free trade can deliver a lot of positive benefits for people in any country, but thinking the U.S. can play a type of savior role for the U.K. in the world economy is really jumping the shark. First, any free trade agreement between the two countries would be aimed at lowering barriers to trade, such as tariffs.
The problem is with being in the EU, the tariffs in the U.S.-U.K. trading relationship are quite low already. According to the European Commission’s policy website, the average tariff rate between the EU and America is below three percent. So, while it would be possible to cut the tariff rates some, these cuts would not be drastic. 
Second, it is not as if the U.S. is an unexplored market which the U.K. does not engage with on the trade front. Data from the U.S. International Trade Commission shows we imported around $53 million in goods and services from the U.K. in 2017, and exported roughly $56.3 million. There is always room for growth, but the idea we could quadruple this relationship, as Trump suggested, is pretty far-fetched. 
Finally, economic theory itself suggests there will always be barriers to enhanced U.S.-U.K. trade.
In an article for The New York Times, economist Paul Krugman lays out how a model known as the gravity equation demonstrates these obstacles. The gravity equation states when two countries begin trading with one another, the amount of trade activity is positively affected by the size of the economies, but negatively affected by the distance separating the countries.
This model has held true with a great many trading relationships, and it would likely hold true in a post-Brexit world. It is simply easier for the U.K. to trade with other European countries, because there is not a massive ocean in between them. This distance makes it incredibly challenging for the U.S. to engage in trade at the same volume as the EU has with Great Britain. 
If the U.K. does indeed go through with the Brexit procedures and comes to the U.S. wanting to negotiate a free trade agreement, we should be all ears.
However, thinking we can be a substitute for the EU is just unrealistic. At least on the international trade front, the U.K. would be much better off just staying in the European Union.