Which US President Is Better For Brexit?

October 26, 2020

Given the relationship between US President Trump and UK PM Johnson, it would seem at first glance that a Trump victory would be best for Brexit.

But, as is usual with these geopolitical things, the situation is a little more complicated. And, of course, there is the issue of how all of this can drive markets, and particularly cable.

Trump has often been associated with the Brexit phenomenon. This is because both the results of the election and the referendum surprised pollsters and contravened the established (establishment?) worldview.

A major difference is that the post-Brexit era has seen three changes of government and two general elections in the UK. Subsequent leaders failed to represent what Brexiteers expected, and the subject still remains controversial.

What the Expectations Are

The expectations, of course, are the issue.

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What exactly constitutes a “good” Brexit? For some, that is a hard Brexit; for others, it is the most non-Brexit-like-Brexit the EU will accept.

That range also applies to how easy or hard it is to reach an agreement. Like with all negotiations, the expectation of how much the other side is willing to compromise determines where one’s negotiation stance will be.

A miscalibration between who holds more leverage in achieving their goals can lead to a negotiation strategy backfiring, thus severely hampering the process.

The current state of play with Trump in the White House, supporting the UK breaking from the EU and happy to do a trade deal, might give the British side more confidence that they can get more out of the EU.

The Counterpoint is Also the Point

On the other hand, the EU might be more insistent on their position due to internal political views because of the style of both Johnson and particularly Trump.

EU politicians might be more sensitive about appearing to be compromising or “caving” to interests associated with the Trump Administration.

A Biden administration will likely support the EU side of the negotiation, with the candidate repeating many of their arguments. Especially over the particular contentious Northern Ireland issue.

This might embolden the EU side to demand concessions, but it could also mean that they might be more willing to offer concessions since a potential free trade agreement between the US and UK will be more amenable to EU interests.

In addition, the EU expects to have an easier time negotiating its own FTA with the US under Biden.

It’s All Your Fault

In the end, it comes down to which side will benefit from a more confrontational approach, and which from a more measured one. Both sides accuse the other of being intransigent.

A second Trump term would support a more aggressive, albeit risky, negotiation tactic. A Biden administration would likely support a more compromising negotiation.

However, that would mean an extension of the talks, which would prolong uncertainty.

By Orbex