UK
Ireland
The UK and US “trade deal” is anything but
The new UK and US trade deal brings some relief, but it will disappoint many businesses.
The UK and US have announced the framework of a new trading relationship. It is the first deal to be announced by the White House since implementing its “Liberation Day” tariffs in April.
For all the fanfare from the office of President Trump and the relief it may bring to specific sectors, the announcement is far from what we traditionally think of as a trade deal. It bears little resemblance to the comprehensive free trade agreement the UK has struck with India, for instance.
The headline for most businesses is that the 10% additional baseline tariff introduced in April still applies to UK goods destined for the US.
What we know about the tariffs
What was announced was less of a trade deal than a series of exemptions for the UK from some of the trade barriers President Trump imposed in recent weeks. These include:
- A quota of 100,000 cars to be imported into the US each year at a tariff rate of 10%, rather than the prevailing 25%
- Section 232 tariffs on steel and aluminium cut to 0%
- Preferential treatment for UK-originating pharmaceuticals, should the US impose tariffs in the future
In return, US-originating goods are to be “fast-tracked” through UK customs, and the UK is to provide greater market access to US products, such as ethanol, beef and other agricultural goods.
Crucially, the additional tariff rate of 10% announced in April will remain in place for all other goods exported to the US.
What remains unclear with the trade deal?
It is important to stress at this point that the deal is not final, with neither side saying when it could take effect.
The full deal is still to be released, and there are significant details we are still waiting to see. As with all trade deals, the devil will be in the details.
What does this mean?
While the deal has been presented as a political win for the Prime Minister, its economic impact remains to be seen. It will come as a welcome relief to businesses impacted by automobile, steel and aluminium tariffs, but the baseline tariff remaining in place will be disappointing news for most businesses exporting to the US.
As the first of these deals announced by President Trump, it is also far from an encouraging precedent for other countries. If a balance in trade gets you this deal, what will a trade surplus with the US get you?
As always, S&W’s Customs & International trade team will be monitoring the situation, analysing details as they become available and providing updates to our clients when we know more.
If you have any questions about how this affects your business or are looking to mitigate the impact of US tariffs, please get in touch.