Trump is threatening a damaging new trade war with the United Kingdom after Brexit

Reuters

Donald Trump

• Donald Trump is threatening to launch a damaging new trade war with the United States' historically closest ally, the United Kingdom.
• In recent weeks Trump and his allies have issued a series of trade threats to the UK on everything from the future of the Iran nuclear deal to Huawei, to taxes on tech firms.
• The threats come as Britain prepares to leave the EU on January 31.
• The UK plans to seek a host of new trade deals as Trump appears to take advantage of the country's vulnerable new position on the world stage.
• Visit Business Insider's homepage for more stories.

Donald Trump is threatening to launch a damaging new trade war with the United Kingdom as the country prepares to leave the European Union.

In recent weeks the president and his allies have issued a series of threats to the UK on everything from telecoms, to vehicle tariffs, to security co-operation.

It comes as the UK parliament on Wednesday voted to ratify Boris Johnson's Brexit agreement with the EU, paving the way for Britain's exit on January 31.

Now as Prime Minister Boris Johnson prepares to seek new trade deals outside of the EU, Trump's administration is poised to take advantage of the UK's vulnerable new position on the world stage.

Trump threatens the UK on tax

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Boris Johnson and Donald Trump

Johnson's administration has pledged to introduce a new 2% tax on sales duty for tech companies such as Facebook and Google in the UK, starting this April.

The levy is designed to target international companies which the UK government believe use their position to avoid tax in the UK.

Johnson's spokesman told a press briefing this week that these companies, most of which are based in the US, are "undermining public trust and confidence in our economic system."

However, Trump's Treasury Secretary Steve Mnuchin responded in Davos this week to what the UK describes as a "proportionate" tax, by threatening a new trade war with the UK over the issue.

"If people want to arbitrarily put taxes on our digital companies, we will consider arbitrarily putting taxes on car companies," Mnuchin said.

The automotive industry is a key part of the UK economy with almost a fifth of overseas sales of UK vehicles going to the US.

Johnson's spokesman responded to the threats this week by saying said that such a trade war would "harm businesses and consumers on both sides of the Atlantic."

The UK's International Trade Secretary Liz Truss was also bullish on the issue on Thursday, saying that the UK's policy was "not a matter for the US. It's not a matter for the EU. And it's not a matter for anybody else."

Trump threatens the UK on security

Stefan Rousseau/Reuters

Boris Johnson and Donald Trump

Threats of a new trade war are set to be escalated if the UK government pushes ahead with its plan to defy Donald Trump and strike a deal with Chinese telecoms company Huawei for its 5G network.

Trump has warned the UK that the intelligence-sharing arrangement between the two allies will be at risk if the deal goes ahead, with US officials warning last week that "Donald Trump is watching closely."

However, Boris Johnson is reportedly preparing to allow the Huawei deal to go ahead despite the threats, amid a widespread belief in Europe that Trump's warnings are a "bluff".

Asked last week whether he would allow the Huawei deal to go ahead, Johnson told the BBC that "the British public deserves access to the best possible technology."

He added: "If people oppose one brand or another they have to tell us what's the alternative?"

EU trade commissioner Phil Hogan last week told an event in London that the president's threat was simply not credible.

"I don't think that will happen at the end of the day," he said.

"You can call their bluff on that one."

Trump threatens the UK on Iran

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Boris Johnson and Donald Trump

The United Kingdom remains committed to the Iran nuclear deal despite Trump pulling the US out of the agreement.

Johnson last week joined with other European leaders in signing a letter endorsing the current deal, which they see as the best chance of bringing Iran back into the fold and preventing a potentially devastating conflict with the US.

However, threats by Trump to impose 25% tariffs on European vehicles appear to have played a part in forcing those same countries to instigate the disputes mechanism last week , which could ultimately cause the entire deal to fall apart.

Now as Britain prepares to enter new trade negotiations with the US, the threat of more punitive trade retaliation by Trump looms over the UK.

The UK threatens Trump on defence

Carolyn Kaster/AP

Over a year and a half into his tenure President Donald Trump has yet to visit American troops in a war-zone.

Johnson's administration hit back against Trump's threats earlier this month with a threat of its own.

Speaking to the Sunday Times, the Defence Secretary Ben Wallace warned that Trump's isolationist foreign policy meant the UK was considering drawing back from its longstanding defence alliance with the US.

"Over the last year we've had the US pullout from Syria, the statement by Donald Trump on Iraq where he said NATO should take over and do more in the Middle East," Wallace said.

"The assumptions of 2010 that we were always going to be part of a US coalition is really just not where we are going to be."

Johnson's administration has repeatedly criticised Trump's stance towards Iran, with Johnson warning that the president's threats to target Iranian cultural sites could be a war crime.

Our Brexit Insider Facebook group is the best place for up-to-date news and analysis about Britain's departure from the EU, direct from Business Insider's political reporters. Join here.

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