Trump’s first trade ‘deal’ doesn’t bode well for the rest of the world
Context:
The US and UK recently announced a trade agreement that, although labeled comprehensive, lacks substantive changes from existing tariff rates and details are still being finalized. The agreement maintains a 10% tariff on British imports, with minor exceptions for certain goods like British cars and airplane parts, while tariffs on steel, aluminum, and some agricultural products were removed. Despite the limited scope of the deal, both sides presented it as a positive step, with the UK describing it as better than no deal at all, and Wall Street responding with optimism. Critics argue that the agreement does little to alleviate the broader trade tensions initiated by previous US tariff policies, especially those affecting trade with China. As negotiations continue, the global economic landscape remains largely unchanged, with high tariffs persisting as a significant barrier to trade.
Dive Deeper:
The trade agreement between the US and UK was announced with minimal changes, as the 10% tariff rate on British imports remained unchanged except for specific exceptions like cars and plane parts.
British cars, previously subject to a 27.5% tariff, now face a 10% tariff, benefiting a niche market of luxury car buyers in the US.
The agreement allows British companies to export plane parts to the US tariff-free, and in return, British Airways plans to order 30 Boeing 787 Dreamliner jets.
Tariffs on steel and aluminum were removed, along with some agricultural products, allowing for tariff-free exports between the two countries.
Despite being labeled 'comprehensive,' the agreement lacks detailed terms and does not significantly alter the current economic state, with high tariffs still in place.
UK Prime Minister Keir Starmer and the US administration presented the deal positively, suggesting it was an improvement over the prior situation, although specifics are still under negotiation.
Economists criticize the deal as insufficient to end the trade war tensions, emphasizing that the US remains a high tariff country and negotiations with larger trading partners like China continue without resolution.