Trump's "Landmark" Trade Pact with UK After Hefty Tariffs: Let's Break It Down
United Kingdom secures significant trade deal marked as historic with Trump administration - Britain and Trump reach a landmark trade agreement
uration: ~4 mins
Donald Trump, the U.S. President, touts a trade pact with the UK as a testament to his tariff strategy. "It's a bloody brilliant deal," Trump declared at a White House presser.
Tariffs on most US-UK trade goods will see a reduction, with autos, steel, and aluminum enjoying the biggest relief. The deal, however, is far from a traditional free trade agreement. Instead, it serves as a foundation for future negotiations.
US-UK Trade: At a Glance
- Auto Tariffs: Incoming UK auto imports will face reduced tariffs of 10% for the first 100,000 vehicles per year, reducing current 25% tariffs.
- Steel, Aluminum, and Aircraft Parts: Import tariffs on these products will be eliminated, saving costs for British importers.
- Boeing Aircraft: The UK will import $10 billion worth of Boeing aircraft, t tariff-free.
- British Exports to the US: Sectors like agriculture and machinery will benefit from increased market access, with estimated opportunities worth $5 billion.
The U.S. and UK traded over €370 billion in goods and services last year, with about 70% of UK exports to the US being services, which are tariff-exempt.
EU-US Trade Tensions: The Deadline Approaches
Trump threatened EU exports worth nearly $100 billion with a 25% tariff if no agreement was reached by July. So far, the Trump administration has not responded to a Brussels offer to mutually lift all tariffs on industrial goods.
The EU Commission is preparing additional counter-tariffs on US products and is reportedly considering export restrictions on certain products worth 4.4 billion euros to put pressure on Washington.
The Road to an Approximation: London vs. Brussels
While the deal with Trump is a symbolic win for Prime Minister Keir Starmer, the real prize lies in an approximation with the EU, set to be discussed at a summit in London on May 19. The UK heavily relies on the EU as a trading partner, with nearly 50% of British goods exports headed there.
The deal with the US may complicate the UK's relation with the EU, especially in regard to animal health and food standards. However, it has been assured that British food standards will not be lowered.
This article was last updated.
- Key Figures:
- Donald Trump
- Keir Starmer
- USA
- UK
- Enrichment Data:
- The agreement intends to enhance bilateral trade between the US and UK, although final details are still being negotiated[1][2][4].
- The deal may put pressure on the EU to negotiate similar agreements, potentially altering trade dynamics within Europe[2][4].
- The reduction in tariffs and trade barriers aligns with WTO principles of reducing trade restrictions, but the deal's specifics might still be subject to WTO review to ensure compliance with global trade rules[2][4].
- The employment policy of the community and the UK, in the context of the trade pact between the US and UK, may need to be revised to accommodate the future negotiations based on the foundation established by the deal.
- Keir Starmer, the Prime Minister of the UK, might need to focus on an approximation with the EU, as the trade relations with the EU are significant, making up nearly 50% of British goods exports.
- The tariff strategy employed by Donald Trump, as part of the US-UK trade pact, has resulted in a reduction of tariffs on most trade goods, with the biggest relief for autos, steel, aluminum, and aircraft parts.
- The typical policy-and-legislation approach to free trade agreements might not apply to the US-UK trade pact, as it serves as a foundation for future negotiations rather than a traditional agreement.
