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U.S.-U.K. Trade Agreement: A Wide Sweep with Skimpy Specifics

Trump's administration unveils trade agreement with the UK, touting significant benefits, yet lacking specifics on accomplishments.

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Trump Government Unveils Trade Arrangement with UK, Providing Scant Information on Achievements
Trump Government Unveils Trade Arrangement with UK, Providing Scant Information on Achievements

U.S.-U.K. Trade Agreement: A Wide Sweep with Skimpy Specifics

Trump Unveils Chummy UK Trade Deal, with a Splash of Caveats

In a melodramatic display, the Trump administration revealed a trade agreement with the United Kingdom yesterday, spotted with limited information and grandiose declarations. Here's the lowdown on this fresh chapter in UK-US commerce.

The deal offers some zest to President Trump's discourse on tariffs, suggesting they may pave ways to open global markets. But initial analyst reactions are tepid, with many pointing out the UK's modest global trade significance for US economy.

"It's more symbolic than economic," noted Beata Caranci, TD Economics' brainy guru, via email. "We're looking at fine-tuning and pain point easing, rather than an end to the trade war."

Trump underscored that more details would surface in the coming weeks. Meanwhile, the administration has christened the agreement "historic" and "a fantastic deal for America."

UK Prime Minister, Keir Starmer, declared the deal a boon for auto jobs, emphasizing the robust bond between the two nations.

The Scoop on the Deal

  • Despite Trump's April 2-imposed 10% duty on most UK imports, the deal will preserve this levy. Economists had expected the levy to be scratched off, but Trump hinted that the 10% universal levy might serve as a base in future negotiations.
  • The US duty on car imports from the UK will slide from 27.5% to 10% for 100,000 cars. Yet, considering that the UK shipped 92,000 cars to the US in 2024, the UK automotive industry can't expand shipments without paying steeper tariffs.
  • UK steel exports can now enter the US duty-free, escaping the 25% tariff Trump had slapped on foreign steel imports.
  • Both nations can each import 13,000 metric tons of beef from each other, while the UK will remove ethanol tariffs for US imports of up to 1.4 billion liters.
  • US duties on airplane engines and other aerospace parts from Rolls Royce will be scrapped, earning a $10 billion Boeing order from a UK airline in return.
  • The UK plans to reduce average tariffs on US goods to 1.8%, amounting to a $200 million reduction in duties. Besides, import taxes on around 2,500 US products (including olive oil, wine, and sports equipment) will plummet, too.
  • The UK also plans to liquidate non-tariff barriers to US exports, though specifics remain undisclosed. The deal promises a $5 billion boost in US agricultural exports and other goods sales, as per the administration's fact sheet.

What's On the Backburner

  • The accord doesn't ensure US companies access to the UK's government-run national health service.
  • There's no change on the UK's digital services tax, hitting US tech giants like Amazon, Google, and Facebook. The UK government hinted at discussing a digital trade agreement, though.
  • Trump stated the deal didn't exempt the UK from the 100% tariffs on foreign films he proposed.
  • Negotiations are ongoing in aspects like pharmaceuticals, semiconductors, critical minerals, copper, and lumber, a British trade official said.
  • The agreement between the US and UK does not abolish the 10% tariff that President Trump imposed on most UK imports in April, contrary to expectations.
  • Trump hinted that the 10% universal tariff might serve as a base in future negotiations, preserving the levy for now.
  • The US duty on car imports from the UK will decrease from 27.5% to 10%, yet the UK automotive industry cannot expand shipments without paying steeper tariffs with a shipment volume exceeding 100,000 cars.
  • UK steel exports can now enter the US duty-free, escaping the 25% tariff that Trump imposed on foreign steel imports.
  • Both nations can each import 13,000 metric tons of beef from each other, and the UK will remove ethanol tariffs for US imports of up to 1.4 billion liters.
  • The US duties on airplane engines and other aerospace parts from Rolls Royce will be eliminated, earning a $10 billion Boeing order from a UK airline in return.
  • The UK plans to lower average tariffs on US goods to 1.8%, resulting in a $200 million reduction in duties, and import taxes on around 2,500 US products (including olive oil, wine, and sports equipment) will also decrease.
  • The deal promises a $5 billion boost in US agricultural exports and other goods sales, according to the administration's fact sheet, but specifics on reducing non-tariff barriers to US exports remain undisclosed.
  • The agreement does not grant US companies access to the UK's government-run national health service.
  • There's no change in the UK's digital services tax, which hits US tech giants like Amazon, Google, and Facebook.
  • Trump stated the deal does not exempt the UK from the 100% tariffs on foreign films he proposed.
  • Negotiations are ongoing in aspects like pharmaceuticals, semiconductors, critical minerals, copper, and lumber, according to a British trade official.

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