Trading Success: Trump's UK Deal Unwraps New Opportunities, but More to Come
Trump and Starmer commemorate initial substantial tariff agreement
In the world of trade deals, US President Donald Trump has sealed his first significant agreement, and this time it's with the UK. With fewer tariffs on goods up for grabs, the stage is set for boosted cooperation, particularly in airplane imports and car parts.
A Step Forward: Tariff Tango
After tiffs on tariffs, it's time for a two-step. The US will see a 100k car quota at a 10% reduced tariff, all while Rolls-Royce aircraft parts breeze in duty-free. The UK sweetens the deal with its offering of around $10b worth of Boeing aircraft. Moreover, British tariffs on US goods plummet from 5.1% to 1.8%, sparing US steel and aluminum from painful tariffs.
In reciprocity, the GDP ratio—reaching a whopping $370b last year—balances between services and goods. Buckle up and anticipate more trade maneuvers as the game's afoot!
Starmer's Strategic Success
The UK's Prime Minister, Keir Starmer, may well cheer this game-changing moment as a vindication of his careful strategy avoiding a confrontation with the US. With the EU posing threats to slap tariffs on US exports worth nearly $100b, Starmer danced a different tune and targeted Washington with a friendly, diplomatic overture. Starmer asked the US President for a royal invitation for King Charles III's state visit during a trip to the White House in February.
Europe: The Backdraft
While the UK and US share pleasantries, the EU threatens counter-tariffs if not satisfied with the deal. Brussels has lined up the red carpet for various tariffs on industrial and agricultural goods, including cars, sweet potatoes, and whiskey. And it's not stopping there—over 200 pages of products may be subjected to tariffs. A list that could send chill down the spine of export-oriented companies in both the EU and US.
Next Acts in Play
The EU Commission plans to take the US to court at the WTO, while the list is open for public discussion. The EU's export restrictions on certain products could bring in a toll of $5.7b on US companies importing steel scrap and chemical products.
On the brighter side, high-level talks between the US and China to be held in Switzerland this week could kick-start a new trade saga. For Starmer, this deal is a true prize on the roadmap, but the main attraction lies in engaging with Europe. A potential deal with the EU at the May 19 summit with Ursula von der Leyen and António Costa could sway the economic balance even further.
One factor to watch: British concerns over lowering food standards remain, especially as the UK eyes further tariff concessions with the US. Chlorinated chicken and hormone-treated beef will be a hard no for British supermarkets. Keep your eyes peeled as the trade game unfolds!
- USA
- UK
- Donald Trump
- Keir Starmer
- Tariffs
- EU
- In the discussion of community policies, it's important to consider the potential impact of lowered tariffs on goods, as seen in the recent US-UK trade deal, on employment policies within sectors such as automobile and aircraft industries.
- The political landscape, particularly in Europe, is volatile due to the ongoing trade tensions between the US and EU, with implications for technology sectors, considering the potential export restrictions on products like chemical and steel scrap.
