Free trade deal hopes remain high

Business secretary Andrea Leadsom has said Britain and the United States remain committed to reaching a free trade deal, despite a dispute over UK plans to tax US tech giants.

US treasury secretary Steven Mnuchin warned on Wednesday the US could retaliate with tariffs on the UK car industry if the government goes ahead with planned digital tax.

Speaking at the World Economic Forum in Davos, he said US president Donald Trump would be raising the issue personally with Boris Johnson. The row raised fears the Prime Minister’s hopes of reaching a swift, post-brexit free trade agreement with the US were unlikely to be fulfilled.

Appearing on Sky News yesterday, Mrs Leadsom confirmed the government would be pressing ahead with the 2 per cent digital tax in April. However, she insisted the relationship with the US remained strong and that efforts to reach a trade deal would continue. Obviously we do from time to time have disagreements or different views on particular issues, but that relationship is very strong,” she said.

“We are on both sides committed to a good free trade deal between the US and the UK. We will continue to work closely with our US friends and neighbours as we seek that free trade deal.”

International trade secretary Liz Truss also struck a defiant tone when asked if the UK intends to concede to American pressure. Ms Truss said: “Let me be absolutely clear – UK tax policy is a matter for the UK Chancellor. It’s not a matter for the US, it’s not a matter for the EU, it’s not a matter for anybody else, and we will make the decisions that are right for Britain – whether it’s on our regulatory standards, tax policy or on anything else.”

Mr Mnuchin said Mr Trump’s administration expects to complete a trade deal with the UK “within this year”.