The “landmark” US-UK trade deal revealed on Thursday by President Donald Trump marks the initial accord to be disclosed since he imposed significant tariffs on both friends and foes starting from April 2.
This is what we understand regarding the fresh trade agreement for products:
‘Increased market access’
The initial “base” tariff of 10 percent applied to most U.S. trading partners in early April continues to be enforced for the majority of products. The most significant decreases in trade obstacles have been observed in goods that were recently hit with additional sector-specific duties of 25 percent.
During the Oval Office announcement, where Peter Mandelson, the British ambassador to the United States, was present, President Trump stated that the new agreement entails “significant enhancements in market accessibility amounting to billions of dollars for U.S. goods.”
According to a statement released by the White House, this accord will generate an extra $6 billion for the Treasury Department through newly imposed tariffs.
This agreement will undoubtedly face rigorous examination before the Trump administration’s own July deadline for negotiations, as certain countries could encounter significantly elevated tariff rates should an accord not be reached.
“The easiest target for the administration was this option,” said Josh Lipsky, who chairs international economics at the Atlantic Council, in an interview with AFP.
He noted that this conveys the idea future negotiations will likely be complex due to the distinct nature of the UK’s position, which may not be easily replicated by other nations.
Support for UK automotive industry
The British car manufacturing sector has emerged as a distinct victor.
The sector, employing around 250,000 individuals in the UK, had been subject to 27.5 percent tariffs prior to this announcement, as stated by Prime Minister Keir Starmer’s office.
As per the agreement revealed on Thursday, the tariff rate for exporting cars from Britain to the United States will be reduced to 10 percent for up to the first 100,000 vehicles dispatched.
This constitutes “nearly the entire amount” that the UK sent to the United States last year, according to the British prime minister’s office.
The White House stated that any UK-manufactured vehicles brought into the United States exceeding the 100,000 unit mark will be subject to a 25 percent duty instead.
Steel and aluminum
A significant aspect of the deal includes the US agreeing to remove the recently-enacted tariffs of 25 percent on steel and aluminum coming from the UK, as stated by the British government.
The U.S. Commerce Department stated that the fresh accord “advances mutual national security objectives, establishing a novel alliance for steel and aluminum,” though it did not confirm the report of a zero percent tariff rate.
The White House has not yet commented on the removal of all steel and aluminum tariffs after being contacted for clarification.
Agriculture
Trump said the new agreement would create a new $5 billion “opportunity” for US farmers, ranchers and producers, including $700 million in ethanol exports, and $250 million in other agricultural exports, including beef.
U.S. agricultural exports have consistently been a major hurdle in trade talks, as British farmers—and shoppers—have raised worries over chlorinated poultry and meat from U.S. farms treated with hormones.
According to the British Prime Minister’s office, both nations have concurred on “mutual new market access for beef products — allowing UK farmers a duty-free quota of 13,000 metric tons.”
The deal will “dramatically boost our beef exports,” according to US Agriculture Secretary Brooke Rollins during a press briefing.
Even with increased and broader US access to British markets, “UK food standards will remain unchanged,” according to Downing Street.
What is excluded?
Threats made by Trump to impose tariffs on pharmaceutical goods are not included in this agreement, except for a pledge from the White House to establish “a secure supply chain for pharmaceutical products.”
According to Lipsky from the Atlantic Council, this suggests that when negotiating, only what is presented on the table gets executed, rather than what might be threatened.
A significant aspect absent from the agreement is digital services, as the White House is eager to address the new digital services tax introduced by the UK targeting American tech companies such as Google and Meta.
Downing Street stated, “Rather than that, both countries have decided to collaborate on a digital trade agreement aimed at reducing bureaucratic documentation for British companies looking to export to the U.S., thereby providing the UK access to a massive market which could significantly accelerate economic growth.”
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