The Trump administration made a notable announcement on Thursday, unveiling a trade agreement with the United Kingdom. However, while the declaration was celebrated with significant fanfare, concrete details regarding the deal’s impacts were sparse. According to the White House, the agreement is set to enhance access to the British market for American beef, ethanol, and agricultural products, while simultaneously allowing British cars and steel greater penetration into the U.S. market.
The agreement bolsters President Donald Trump’s assertions that imposing hefty tariffs can result in favorable trade deals that open international markets. Yet, initial reactions from economists were reserved. Many remarked that, given the size of the U.K. as a trading partner, the agreement would not dramatically influence the U.S. economy. “It’s more symbolic than economic,” noted Beata Caranci, the chief economist at TD Economics, through an email. She suggested that such announcements are more about fine-tuning existing arrangements and alleviating trade tensions rather than ending ongoing trade conflicts altogether.
While President Trump hinted that additional specifics would emerge in the following weeks, he described the current deal as “historic” and beneficial for America. U.K. Prime Minister Keir Starmer emphasized the protection of automotive jobs and highlighted the essential nature of the U.S.-U.K. relationship. Despite being the fourth-largest market for U.S. exports, the U.K. accounted for just 4.5% of U.S. exports up to this year.
Key aspects of the deal include:
– Maintenance of a 10% duty on nearly all U.K. imports, imposed by Trump in April.
– Reduction of tariffs on U.K. car imports to 10%, capped at 100,000 vehicles, continuing the pressure on the U.K. auto industry.
– Duty-free access for U.K. steel exports to the U.S.
– Mutual beef market access of 13,000 metric tons.
– Elimination of U.K. tariffs on up to 1.4 billion liters of U.S. ethanol.
– Removal of U.S. duties on Rolls Royce airplane engines, with a reciprocal Boeing plane purchase by a U.K. airline.
– Reduction of U.K. tariffs on U.S. goods to 1.8%, affecting American products like olive oil, wine, and sports equipment.
– An agreement to reduce or abolish non-tariff barriers to U.S. exports, positing potential for $5 billion in new export opportunities.
Despite these provisions, the agreement does not enhance U.S. companies’ access to the U.K.’s national health service or modify the controversial digital services tax affecting American tech giants. There are ongoing discussions regarding a digital trade deal. Other exemptions remain off the table, including the proposed 100% tariffs on foreign films. Additional negotiations are progressing on issues concerning pharmaceuticals, semiconductors, and other critical minerals.