UK Strikes Trade Agreement with Trump Administration - EU Ponders Retaliatory Tariffs - U.S. President Donald Trump finalizes an agreement with the United Kingdom; European Union contemplates retaliatory tariffs in response
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US Trade Policy: Trump on Winning UK Deal as EU Talks Turn Tense
Hey there! Buckle up! We're diving into the latest on US trade policy with the UK and EU.
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In a show of triumph, Donald Trump cheered a trade pact with the UK as a hallmark of his trade policy. "It's a big bloomin' deal," Trump declared at a press conference in the White House.
He also expressed his eagerness to hammer out a deal with the EU, despite EU threats to retaliate with tariffs on US exports worth roughly 100 billion euros.
The US-UK deal marks the first major trade agreement since May, following Trump's aggressive tariff impositions. The US President hinted that many more deals could be in the offing.
"A swear-worthy day"
UK Prime Minister Keir Starmer might feel he's won one for the team, with his approach to evade a standoff with the US. "This is a fantabulous historic day," Starmer reportedly said over the phone during the press conference.
Trump described the agreement as "comprehensive." However, sources from the UK government suggested the deal is not a traditional free trade agreement but more of a framework for further negotiations.
Down in the Nitty-Gritty
Currently, most UK exports to the US are subject to a 10% tariff, while steel, aluminum, cars, and car parts face a 25% tariff. This situation is poised to change.
US Trade Minister Howard Lutnick announced a quota of 100,000 vehicles at a 10% tariff. Rolls-Royce aircraft parts will also enter the US duty-free. In response, the UK will import Boeing aircraft worth around 8.9 billion euros. Tariffs on British steel and aluminum will also be waved goodbye.
Last year, the trade volume between the US and the UK stood at around 370 billion euros. Interestingly, about 70% of UK exports to the US are services, making them tariff-invincible, while only about 30% are goods.
Professor's Take: A negotiating win for the UK
Initially, legal expert Holger Hestermeyer labeled the trade pact a negotiation triumph for the UK. "The Brits managed to reduce or avoid the new Trump tariffs without compromising on food standards," Hestermeyer reportedly said.
Trump's demand for the scrapping of the tax on digital services seems to have fallen on deaf ears for now, Hestermeyer added.
Countdown to EU Deadline
Trump had previously threatened the EU with blanket tariffs of 25% if no agreement was reached. The current deadline is July. So far, the Trump administration has disregarded a Brussels offer to eliminate mutual tariffs on industrial goods.
The US President's goals are to correct trade imbalances and shift production to the US through tariffs. At the same time, tariff revenues are intended to assist in funding his generous tax cuts, at least partially.
How has London reacted to the tariffs?
During his visit to the White House in February, Starmer greeted Trump with a full-blown sweet-talking session, presenting an invitation for a state visit by King Charles III.
Meanwhile, Brussels has threatened to impose counter-tariffs on US exports worth up to 115 billion euros. These duties could be levied on industrial and agricultural products, such as cars, sweet potatoes, and whiskey, if negotiations with Washington fail to yield results.
Additional tariffs could also hit machinery, auto and aircraft parts, chemicals, whiskey, rum, and wine from the US. The EU plans to make a list of affected products public for discussion within the business community.
On the defensive, EU officials are simultaneously discussing potential WTO lawsuits and EU export restrictions on certain products worth 5.5 billion euros, such as steel scrap and chemical products that US companies currently appreciate.
Keeping the Peace, Maintaining Standards
The agreement with Trump serves as a victorious symbol for Starmer. However, the economically more significant approximation with the European Union is highly valuable. A summit with EU Commission President Ursula von der Leyen and EU Council President António Costa is scheduled for May 19 in London, where significant progress is expected.
Maintaining high food standards remains a priority for the UK, a British government spokesperson stressed. There will be no chlorinated chicken or hormone-treated beef in British supermarkets, despite the US agreement.
The EU remains a far more significant trading partner for Britain, with almost half of British goods exports going to the EU, compared to just 16% to the US.
- In response to the US-UK trade agreement, UK Prime Minister Keir Starmer celebrated the deal as a "fantabulous historic day."
- Despite the US-EU talks turning tense, US President Donald Trump expressed his eagerness to negotiate a deal with the EU, despite threats of retaliatory tariffs.
- The US-UK trade deal marks the first major trade agreement since May and may signal many more to come, according to Trump.
- The US-UK agreement will see a reduction or waiving of new Trump tariffs on British steel and aluminum, as well as zero tariffs on Rolls-Royce aircraft parts.
- The EU has threatened to impose counter-tariffs on US exports worth up to 115 billion euros if negotiations with Washington fail, potentially affecting a wide range of products including machinery, auto parts, and whiskey.
