Switching Gears: Trade Agreements Take Flight with Boeing and Rolls-Royce
Trump and Starmer rejoice over initial substantial tariff agreement
Hooray for deals! The U.S. president, Donald Trump, is thrilled about the latest trade pact with Britain. It's the first major agreement with a key trading partner since the bulk tariff implementations in April. Let's dive into the details of this landmark accord — it's not just about airplanes, though they're a big part of the story!
U.S. exports in the spotlight include airplane parts, specifically from Rolls-Royce. No tariffs here! Sounds like sweet music to British ears, as they'll now import planes from Boeing to the tune of around $10 billion (around $8.9 billion). And the U.S. will ease up on tariffs in response, sliding down from 5.1% to a mere 1.8% on British goods. Plus, the curtain falls on all tariffs on British steel and aluminum.
So, what's cooking between the U.S. and the UK? A trade volume of about $370 billion in 2021, with 70% of British exports to the U.S. coming from services (happy news for service providers) and only 30% from goods. The new deal lays the groundwork for further negotiation, focusing on specific sectors rather than a comprehensive free trade deal.
But wait, there's more! Keir Starmer, the British prime minister, might just be feeling pretty pleased with himself. He's also striking a deal with India, aiming to boost bilateral trade by a jaw-dropping £25.5 billion (approximately $30 billion) by 2040. It's the most significant trade deal since the U.K.'s departure from the European Union, and it's all about maintaining balance with other economic powerhouses like the EU, China, and the U.S. without alienating any of them.
Starmer's Labour Party: Pressure Cooker Politics
Starmer isn't the only one under pressure. Since last summer's election, his government has taken a fall faster than they ever expected. Adding insult to injury, Labour Party took a hit in the local elections early this month. Sounds like a repeat of Trump's disappearing popularity due to economic policies.
The EU, on the other hand, isn't one to back down. They're threatening to slap a whopping 25% tariff on US exports valued close to $100 billion if a deal isn't reached. And the clock is ticking, with a deadline currently set for July. Meanwhile, the Trump administration remains tight-lipped on Brussels' proposal for mutual tariff lifting on industrial goods.
Tariff Talk: A Tale of Two Worlds
Economists have voiced concerns over Trump's tariff plans for films, questioning if this strategy makes sense. The tariffs aim to address trade imbalances and encourage domestic production while also providing funds to finance expensive tax cuts. But is it all just smoke and mirrors? Only time will tell.
Starmer, however, has had his charm offensive on with Trump. When Starmer visited the White House back in February, he presented the U.S. President with a state visit invitation for King Charles III. Now, that's a gesture designed to win friends and influence people!
Over in Brussels, things are taking a different turn. The EU Commission is reportedly preparing new tariffs on US exports worth up to $115 billion, including automotive parts, machinery, chemicals, and whiskey. There's even a list of more than 200 products under consideration, a five-billion-dollar chunk of which concerns steel scrap and chemical products. But don't worry, folks! The EU is consulting with organizations like the European Camera Industry Coalition and the US export industry to apply pressure for a deal with the EU.
Legal Battles on the Horizon
In addition to the new tariffs, the EU Commission is also mulling over EU export restrictions on certain products valued at $5.5 billion, should negotiations with the U.S. fail. The list includes steel scrap and chemical products. The Commission's also planning to sue the U.S. over tariffs at the WTO, hoping an expert panel will set the record straight on any violations of WTO rules.
In terms of a trade agreement with the EU, Starmer has emphasized the need to quickly secure a deal with Washington. Unlike Brussels, he doesn't intend on holding the line with counter-tariffs. Keep your eyes peeled for high-level trade talks in Switzerland this week. A successful deal with Trump would be a symbolic win for Starmer, but economically speaking, the EU is a more vital trading partner for the UK, with about half of British goods exports heading their way.
Finally, a friendly reminder from the U.K. government that despite this new partnership, the deal will not result in lower food standards for British supermarkets. No chlorinated chicken or hormone-treated beef for our friends across the pond!
- USA
- UK
- Donald Trump
- Keir Starmer
- Tariffs
- EU
- The U.S. and the UK have agreed on a trade deal, with the U.S. set to reduce tariffs on British goods as a response to imports worth around $10 billion from Boeing, following a 5.1% tariff implementation in April.
- Labour Party, led by Keir Starmer, is also negotiating a significant trade deal with India, aiming to boost bilateral trade by £25.5 billion (approximately $30 billion) by 2040.
- Keir Starmer has been engaging in diplomatic efforts, presenting President Trump with a state visit invitation for King Charles III to attempt a charm offensive.
- The European Union is considering imposing new tariffs on US exports, including automotive parts, machinery, chemicals, and whiskey, worth up to $115 billion, as well as considering export restrictions on certain products worth $5.5 billion, should negotiations fail, with a focus on steel scrap and chemical products.
