9 May 2025

USA & UK Announce Trade Deal That Fizzles

by Bonnie | | 0

Donald Trump and UK Prime Minister Sir Kier Starmer announced a breakthrough trade agreement, but its details landed in markets with a dull thud.

In 2023, average USA tariffs on goods imported from the UK averaged 3.3%. UK tariffs on goods imported from the USA averaged 3.8%.

In the announced deal, USA tariffs on cars from the UK will drop from the current 27.5% to the blanket 10% Trump is imposing on most goods from most countries. Up to 100,000 cars per year will be allowed from the UK, which is close to last year’s total car exports from UK to the USA.

Trump’s new 25% tariff on steel going from UK to USA will be dropped.

The UK will drop its tariff on ethanol going from USA to UK. Ethanol is used to produce beer.

Reciprocal market access will open up for beef. This allows UK farmers to export up to 13,000 metric tonnes of beef to the USA without tariffs. Questions immediately arose in the UK about how beef that does not meet UK standards will be kept out of imports from the USA. The UK does not allow hormone-fed meat and has stricter animal welfare rules than the USA. Questions also arose about whether the USA might send chlorine-washed chicken to the UK.

The agreement says the UK will get “preferential treatment” in regard to future tariffs the USA imposes through declarations that certain imports threaten national security.

Missing from the deal is any break from the 100% tariff Trump threatens to impose on film and TV imports into the USA, which would be devastating to the UK. Also missing are breaks on tariffs against the UK’s pharmaceutical exports, threatened to go to 25%, and the 10% general tariffs Trump imposes on nearly everything he does not tax even higher from nearly every country.

Markets were not excited by the news, with some commentators saying it is more a memorandum of understanding than an actual deal.

Click here for more details.

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