UK successfully negotiates reciprocal tariffs with US

The UK has become the first country to reach a trade agreement with the US since Washington announced reciprocal tariffs on trading partners. For the US, this agreement is considered a framework for future trade agreements with other partners, as Washington prepares to complete dozens more trade deals. This is a key diplomatic victory for the UK, as the two sides can reach an agreement after many years of negotiations.

The cargo port in Liverpool, the UK.

President Donald Trump said the US has reached a “full and comprehensive” trade agreement with the UK. Accordingly, the US abolished tariffs on the UK’s steel and aluminium exports, and granted a 10% tariff quota (down from 27.5%) for 100,000 British cars exported to the US each year, accounting for 80% of the total 120,000 cars exported to the US each year.

In return, the UK government abolished tariffs on US ethanol and agreed to reciprocal market access for beef. Accordingly, British farmers were granted a duty-free quota for 13,000 tonnes of beef.

The agreement does not mention controversial issues such as the UK's digital services tax or opening the healthcare market to US service providers.

The agreement was announced after much effort and a soft approach by British Prime Minister Keir Starmer as the UK sought to sign a deal with its largest trading partner, to reduce the impact of tariffs on the automotive, food, beverage and steel industries.

The UK's total annual trade revenue with the US is 314.6 billionGBP (417.6 billion USD), of which 196 billion GBP (260 billion USD) is the value of goods exported to the US.

President Trump called it a breakthrough deal, and Prime Minister Starmer said it would protect British businesses and thousands of highly skilled jobs in the country, while providing unprecedented access for British farmers to the US market without affecting high UK food standards.

The deal is also important for the UK pharmaceutical industry, including important measures for the industry with significant incentives.

However, many analysts say the real benefits of the deal are still limited, although the two sides have been in continuous trade negotiations for nearly 10 years. The areas of negotiation in the agreement are narrow, and the two countries have maintained the status quo, making only minor changes.

Notably, despite being an important ally and having a balanced trade in goods with the US, the UK has not won any concessions from the White House, as the 10% import tariff announced by President Trump last month remains in place on most UK goods.

Although it is considered a step forward to help mitigate the damage from the tariff war, in reality, goods from the UK are still subject to higher tariffs than before "Liberation Day,April 2" - the day the US President announced the reciprocal tariffs.

According to the agreement, the US reduced tariffs on UK goods to 9.1% from 11.6%, still much higher than the level of about 1% before the "Liberation Day". The trade deal with the US significantly supports the UK's automotive and pharmaceutical industries, but is considered unlikely to change much for the UK’s economic growth momentum.

The key industries of the deal account for just a third of the UK export revenue to the US and less than 1% of the country’s GDP.

The trade deal with the US, while falling short of the hoped-for post-Brexit free trade deal, opens the door to further negotiations, including the potential reduction of 10% tariffs on certain UK exports, according to UK officials. The deal could help strengthen the economy by reducing the uncertainty that undermines business and consumer confidence.

NDO