Britain and America have officially launched negotiations for a historic trade agreement over video conference, with both sides pledging to seek an “ambitious” deal.
Each represented by about 100 officials, the two sides said a transatlantic partnership would contribute to the long-term health of both countries amid a battle to recover from the coronavirus pandemic.
As the largest and fifth-largest economies in the world, both nations emphasised the potential economic benefits of a deal as the UK lifts its horizons beyond the European Union.
However, estimates provided in the Department for International Trade’s own negotiating objectives suggest an agreement may boost GDP by just 0.07pc to 0.16pc - not enough to make up for lost growth of between 2pc to 8pc which a 2018 Whitehall study predicted would disappear due to Brexit.
Harry Broadman, a trade negotiator in the Bush and Clinton administrations and managing director of the California-based Berkeley Research Group, warned that a comprehensive agreement was unlikely.
He said: “The UK is underestimating the vociferousness of what the US will demand,” he said. “If I were in Boris Johnson’s shoes, I’d spend my limited resources on trade negotiators on dealing with the EU.
“Mr Trump’s number one metric is to lower the US trade deficit.
"A free trade agreement (FTA) is a tall order but deals on one or two sectors - where the UK buys more US goods and vice versa - could well be where we end up. It wouldn’t be economically meaningful and it’s a far cry from an FTA.”
It came as new data showed a plunge in US exports led the country’s trade activity into collapse in March, with the country's deficit widening by $4.6bn (£3.7bn) to $44.4bn.
The fall was driven by reduced international travel and tourism due to coronavirus-related restrictions: exports fell 45pc and imports lost 65pc.
Gregory Daco, chief US economist at Oxford Economics, said he expects trade activity to slump more than in the financial crisis as US export and import volumes both fall 17pc this year.
Earlier data showed the US is set to borrow a record $3 trillion this quarter to finance an unprecedented rescue package of direct payments and loans.
This money will support tens of millions of unemployed workers and businesses forced to close by lockdown measures, as well as cover a shortfall in tax revenues after the government postponed the deadline for tax payments this year from April to June.