US-UK Trade Agreement: Trump Praises Deal as EU Threatens retaliatory Tariffs
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Trade Agreement Signed by Trump with British: EU Contemplates Counteractive Tariffs - UK-EU Relations Tense as Trump Greenlights Trade Agreement; EU Contemplates Reciprocal Tariffs Response
US President Donald Trump recently hailed a trade pact with the UK, claiming it to be a testament of his tariff policy's success. "It's a bloody marvellous deal," Trump exclaimed at a press conference.
He also expressed a desire to strike an accord with the EU, despite the EU's threat to levy retaliatory tariffs on US exports exceeding $90 billion.
The agreement with the UK marks the first trade agreement with a major trading partner since Trump implemented tariffs on a broad spectrum of goods in early April. Trump alluded to the possibility of more such agreements coming to fruition.
"A bloody fantastic, historical day"
UK Prime Minister Keir Starmer might find vindication in his approach, aiming to evade confrontation with the US. "This is quite frankly a bloody fantastic, historical day," Starmer stated over the phone during the press conference.
Trump described the agreement as "inclusive." However, sources within the British government suggest that it is not a conventional free trade agreement. Instead, it covers specific areas and serves as a platform for further negotiations.
Currently, most British exports to the US face a 10% tariff, with steel, aluminum, cars, and car parts levied a 25% tariff. This is expected to be lowered to a quota of 100,000 vehicles at 10%, according to US Trade Minister Howard Lutnick. Rolls-Royce aircraft parts will also be allowed tariff-free entry into the US. In turn, the UK will import $10 billion worth of Boeing aircraft. Tariffs on British steel and aluminum will also be abolished.
The trade volume between the US and the UK was approximately $370 billion in 2020. However, around 70% of UK exports to the US consisted of services—exempt from tariffs—and only about 30% were goods.
A legal expert initially evaluated the trade pact as a negotiating victory for the UK. "They managed to reduce or evade the new Trump tariffs without transgressing limits such as lowering food standards," stated Holger Hestermeyer, who teaches international and EU law at the Vienna Diplomatic Academy.
Even Trump's demand for the abolition of the tax on digital services has been temporarily shelved, according to Hestermeyer.
The deadline for the EU agreement expires in July. Thus far, the Trump administration has not offered a response to the EU’s proposition to abolish tariffs on industrial goods reciprocally.
Trump aims to enforce tariffs to rectify alleged trade imbalances and relocate manufacturing to the US. Concurrently, tariff revenues are intended to finance his costly tax cuts partially.
How has London handled the tariffs?
UK Prime Minister Starmer has consistently prioritized concluding a trade pact with Washington. Unlike the EU, he has not threatened retaliatory tariffs.
Starmer made his intentions known to Trump during a White House visit in February. He presented the US President with an invitation for a state visit by King Charles III.
Conversely, Brussels' response was quite different. The European Commission is considering imposing new tariffs worth up to $110 billion on US exports, including cars, agricultural products, and alcoholic beverages, if negotiations with Washington fail to produce a solution.
The export of US components, chemicals, and spirits, such as whiskey, rum, and wine, could face additional tariffs. The EU's extensive list of products, containing over 200 pages, deemed subject to tariffs will now be made public and discussed with the business community.
In parallel, the EU Commission plans to take the US to court at the WTO over the tariffs and may impose $5.7 billion worth of export restrictions on certain products, such as steel scrap and chemical products, in the event of a lawsuit.
It remains to be seen whether this deal could hinder an alignment between London and Brussels. The EU, as a whole, is a more crucial trading partner for Britain. "Almost half of British goods exports go there. To the US, as the most significant destination, 'only' 16%," said Marc Lehnfeld of the state-owned Germany Trade and Invest (GTAI) in London.
- Despite the EU's threat to impose retaliatory tariffs on US exports worth more than $90 billion, US President Donald Trump expressed a desire to strike an agreement with the EU.
- The trade agreement with the UK, a major trading partner, marks the first such agreement since Trump implemented tariffs on a broad spectrum of goods in early April.
- UK Prime Minister Keir Starmer might find vindication in his approach, given his aim to evade confrontation with the US, as evidenced by his statement about the agreement being a "bloody fantastic, historical day."
- The EU Commission is considering imposing new tariffs worth up to $110 billion on US exports, including cars, agricultural products, and alcoholic beverages, if negotiations with Washington fail to produce a solution.
- It remains to be seen whether this UK-US trade deal could potentially hinder an alignment between London and Brussels, as the EU, as a whole, is a more crucial trading partner for Britain.
