PROSPECTS for US-UK trade have been under the microscope ever since Theresa May visited the White House in January, with a declared intention to “renew the special relationship”.
And the mood music has since been positive, with US President Donald Trump tweeting that the nations could “very quickly” strike a bilateral trade deal that would be “big and exciting” for jobs. The British prime minister hailed his comments as a “powerful vote of confidence” in the UK.
Soothing news for exporters, you might think, given the US is the UK’s largest single export market.
Indeed, Federation of Small Businesses research on attitudes to Brexit suggested 49% of small exporters wanted a trade deal US ahead of any other national market.
However, 63% of respondents said a deal with the EU bloc was their top priority. And while UK exports to the States were worth £96bn in 2016, that was less than half the value of exports to the EU as a whole.
British American Business Council (BABC) chief executive Jeffries Briginshaw said that while companies are “pleasantly interested” in ministers’ optimism, most were busy with day-to-day concerns.
“People welcome that encouragement but I don’t think anybody believes a trade deal is really going to happen in three months. These things take time.
“I want to say that people are thinking about new opportunities but in reality people think about what’s going to change as a result of Brexit and mitigating any risks,” says Briginshaw, who also heads up BritishAmerican Business, which runs the London and New York chapters of the council’s membership network.
The prospect of the UK ditching the current stringent EU food standards in order to secure a trade has also proven hard for some Brits to stomach, as they contemplate hormone-fed beef and GM crops being imported into the UK for the first time.
International Trade Secretary Liam Fox responded to the outcry by declaring the British media to be “obsessed with chlorine-washed chickens”, although that put him at odds with cabinet colleague Michael Gove.
Despite these concerns, Briginshaw says British firms should remain alert to the opportunities Stateside and try to adopt a “business as usual” approach where possible.
“We would say to our members to continue to look at the US market. It’s a great market, which is why 20% of our exports go there,” he said, noting that currency movements since the Brexit vote had “priced British products into attractiveness”.
Briginshaw believes British firms are not currently making the most of the available opportunities.
“You wonder whether people are hungry enough. In other markets people might be lazy and think ‘well, if they can’t invoice in English then I won’t bother dealing with them’, but that’s not true of the US.”
So where do the opportunities lie?
According to the Department for International Trade (DIT), the top 10 industries importing into the US are:
- Electrical machinery and equipment
- Machinery and mechanical appliances
- Mineral fuels and oils
- Optical, photographic, cinematographic, measuring and precision equipment
- Furniture, mattresses and soft furnishings
- Pearls, precious and semi-precious stones and metals
- Organic chemicals
Details of current requests from American importers are listed on the department’s export-focused great.gov.uk website. And Briginshaw says there are opportunities across the board for trading in the States.
“There’s not really a space where there isn’t an opportunity. It’s the country where if you get it right you get rich and retire early, because it has the biggest consumer GDP in the world.”
But he warns against relying on a “Hollywood” vision of success, of taking the US by storm like the Beatles, without a detailed strategic plan.
“With the US, it’s easy to imagine a business case because it feels easy, it feels great and they are like us. But there’s no excuse for that. The checklist process isn’t complicated but I do think there’s still a gap between full-take up of that approach and the success stories and disasters.”
Market research checklists are available from trade bodies, DIT, chambers of commerce and BABC chapters such as those in London, the Midlands, north-west England, Scotland.
“There’s no such thing as US market entry. You have to go much more granular,” says Briginshaw.
“People need to think about geography. We really want people to be thinking through things like tax rates – whether they’re cheaper in Massachusetts than Illinois – things like that.”
As well as subtle cultural differences, there can be surprises in areas like adoption of technology. For example, while the US was slow to explore chip and pin or contactless payment technology, the app economy developed much more quickly.
“If you have an app-based proposition it might supercharge your potential,” says Briginshaw. “But if you have a touch technology proposition that could be a complete deal-breaker.”
BABC has chapters in several US cities, promoting trade and investment opportunities through seminars, events and communications. Some chapters organise trade missions.
A delegation from New England was due to visit Newcastle, Leeds and Manchester in September to look at opportunities in life sciences, technology and business services. And the process works both ways.
“Three previous trade missions from the northeast of England… resulted in several of the UK companies setting up operations in the New England region,” according to the organisers.
“Our trade mission goal is to continue to develop similar outcomes from this trip.”