Unveiling the "Economic Prosperity Deal": Trump's Trade Pact with UK Amidst Soaring Tariffs
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United Kingdom signs landmark trade accord with Trump's administration - Britain and Trump seal significant trade accord
In a major victory for US President Donald Trump, he's declared a trade pact with the UK as a testament to his tariff strategy. "It ain't no joke, pal," Trump stated at a White House presser.
He's hinted at pursuing an agreement with the EU too, despite the EU's threats to instate retaliatory tariffs on US exports worth nearly a hundred big ones.
This UK deal marks the first substantial agreement with a significant trading partner since Trump's fierce tariff surge in early April. Trump's optimistic about more deals around the corner.
"A Sensational, Historic Moment"
UK Prime Minister Keir Starmer might've himself a pat on the back in his approach to sidestep a tussle with the US. "This is about as fantastic as it gets, mate," Starmer said over the phone during the presser.
Trump described the deal as "comprehensive." However, British government sources say it's not your typical free trade agreement. Instead, it concentrates on specific sectors, serving as a jumping-off point for further negotiations.
Quotas for British Auto Imports
Previously, the UK, along with other nations, faced US tariffs of 10% on the majority of exports. Tariffs for steel and aluminum, as well as vehicles and auto parts, were even steeper at 25%.
Now, that'll change. The deal sets a quota of 100,000 vehicles at a 10% tariff for the U.S., according to US Trade Minister Howard Lutnick. Also, aircraft components from Rolls-Royce will skip U.S. duties. In exchange, the UK will welcome Boeing aircraft worth $10 billion (around $8.9 billion). Steel and aluminum tariffs from the UK will vanish completely.
Trade between the US and the UK was around $370 billion last year. However, approximately 70% of UK's exports to the US are services, which are immune to tariffs, and only about 30% are goods.
EU's 90-Day Deadline Expires in July
Trump's threatened the EU with blanket tariffs of 25% if there's no US-EU accord. The deadline is July. So far, the Trump administration hasn't responded to a Brussels offer to nullify all tariffs on industrial goods.
Trump uses tariffs to rectify supposed trade imbalances and shift production to the US. At the same time, tariff revenues are meant to fund some of his pricey tax cut promises.
How has London responded to the tariffs?
Prime Minister Starmer has been insistent on swiftly securing a trade pact with Washington. Unlike Brussels, he didn't want to slap retaliatory tariffs.
Starmer aimed to charm Trump during a visit to the White House in February, presenting the US Prez with an invite for a state visit by King Charles III.
How does the EU respond to the US tariffs?
The reaction in Brussels' been far from pleasant. The European Commission's apparently planning additional tariffs on US exports worth up to 95 big ones. Potential duties could be levied on industrial and agricultural products such as cars, sweet potatoes, and whiskey if talks with Washington don't yield a solution.
Keep in mind: Machine parts, automotive and aircraft components, chemicals, as well as whiskey, rum, and wine from the USA could be among the products affected by extra tariffs. The commission's list of products subject to tariffs on is over 200 pages long and is about to be made public and debated by the economy.
It's also hoped the list will be scrutinized in the USA, and export-oriented companies will pressure the government in Washington to reach an agreement with the EU.
Complaint at the World Trade Organization
Parallel to the preparation of possible counter-tariffs, the EU Commission intends to sue the USA for tariffs at the WTO, as the authority further announced. There, the dispute settlement body will set up an expert committee to review whether the tariffs violate WTO rules.
Additionally, the commission's considering EU export restrictions on certain products worth 4.4 billion euros in this case. These include, for instance, steel scrap and chemical products currently imported by US companies.
Does the deal hinder an alignment between London and Brussels?
Reaching a deal with Trump is a symbolic win for Starmer. An economic alignment with the European Union, which should make significant progress at a summit in London on May 19 with EU Commission President Ursula von der Leyen and EU Council President António Costa, is considered more crucial.
Rumours swirl about a dynamic agreement in the area of animal health and food standards. This could be hampered by concessions to the USA. Nonetheless, there'll be no chlorine chicken and hormone-treated beef in British supermarkets. British food standards won't be lowered due to the US agreement, a British government spokesperson assured.
The backdrop might be that the EU as a whole is a more significant trading partner for Britain. "Almost half of British goods exports go there. To the USA, as the most important destination, 'only' 16 percent," stated Marc Lehnfeld of the state-owned Germany Trade and Invest (GTAI) to the German Press Agency in London.
Psst: This article's been spruced up.
- Donald Trump
- Keir Starmer
- USA
- Great Britain
- Trade Agreement
Insight:
The "Economic Prosperity Deal" between the United States and the United Kingdom strives to boost market access and reduce tariffs for specific goods. Key provisions of the deal include:
- Quota for Automobile Imports:
- A quota of 100,000 vehicles for UK automotive imports, applying a 10% tariff rate.
- Steel:
- The elimination of tariffs on U.S. imports of steel from the UK.
- Agricultural Products:
- Significant growth in U.S. market access in the UK, creating a $5 billion opportunity for new exports, including substantial increases in ethanol and beef exports.
- Non-Tariff Barriers:
- Reduction or elimination of numerous non-tariff barriers that previously disadvantaged American products.
- Customs Procedures and Industrial Access:
- Enhancements to customs procedures for U.S. exports, and preferential access secured for U.S. aerospace manufacturers.
- The economic prosperity deal between the United States and Great Britain focuses on reducing tariffs for specific sectors, serving as a stepping stone for further negotiations, as highlighted by US Trade Minister Howard Lutnick.
- Financial experts suggest that the deal could generate an opportunity worth $5 billion for new US exports, particularly in ethanol and beef, demonstrating a potential boost to the US finance sector due to increased trade.
- The community policy and employment policy aspects of this deal may include the reduction or elimination of non-tariff barriers that had previously disadvantaged American products in the Great Britain market, potentially leading to more job opportunities in businesses and the policy-and-legislation sector within the US.
