U.S.-U.K. Trade Relations: Historic Trade Agreement Reached After Trump's Tariff Imposition, Signifying First Trade Deal since the 10% Tax Implementation
Let's Get Down to Brass Tacks:
The Yanks and the Brits have cooked up a slick deal, setting up a trade zone for aluminum and steel, and securing pharmaceutical supply channels.
Donald J. Trump, our beloved POTUS, declared on Thursday that this deal is all about reciprocity and fairness in international trade. But he also cautioned that the ink's still drying on the final agreement.
In the coming days, we'll have the whole enchilada inked. This is the first deal on the table since Trump slapped his so-called "America First" tariffs on foreign goods.
Trump also mentioned that this arrangement would bring more beef and ethanol exports to Blighty, smoothing customs clearances for American goods. The White House estimates that this deal will net $6 billion in revenue from the continued 10% tariffs and unlock $5 billion in new export opportunities.
On the British side, they're dropping their tariffs on steel and aluminum imports from 5.1% to a measly 1.8%. They've also agreed to provide greater access to U.S. goods.
Britain already had a trade surplus with the USA, which made it easier to find common ground. After all, Trump's tariffs are all about eliminating those pesky annual trade deficits with our international pals.
The new Labour Prime Minister, Keir Starmer, joined forces with Trump in this announcement over the phone. Starmer believes this deal will boost trade and create jobs.
Trump started a global trade war when he imposed universal 10% tariffs. He's also slapped 25% tariffs on cars, steel, aluminum, Canada, Mexico, and a whopping 145% tariffs on China. U.S. and Chinese officials are due to convene for talks in Switzerland on Saturday.
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Starmer's government is trying to build new trading relationships with the USA, China, and EU without pissing off the others post-Brexit.
Economists and the CEO of a top FTSE 100 company predict that the immediate economic impact of this tariff deal will be small but that trade agreements in general will boost long-term growth. The UK recently struck a free trade agreement with India.
The USA and the UK have been keen to seal a bilateral trade agreement since Brexit allowed Britain to rip away from the EU in 2016. Back then, famed Prime Minister Boris Johnson promised a U.S.-Britain trade pact as a lure for Brexit.
Last year, the USA enjoyed a $11.9 billion surplus in goods trade with the UK, with the $68 billion in goods imported from the UK accounting for just 2% of all imports.
Market Moves
Wall Street is breathing a collective sigh of relief with the hope that this deal could keep the looming recession at bay.
Since April 2, US officials have been engaging with trading partners in a flurry of meetings to nudge them towards more agreeable trading terms.
As of now, the S&P 500 is up 0.97%, on track for its 11th gain in the last 13 days. The Dow Jones Industrial Average is 1.02% higher, while the tech-heavy Nasdaq composite is up 1.17%.
Stocks have been on a rollercoaster ride for weeks, swinging up and down with investors' hopes that Trump might strike deals with other countries to lower the dreaded tariffs.
[1] - Source: Financial Times[2] - Source: CNN Business[3] - Sources: White House Statement, Business Insider.
- The economists' conclusive opinion is that the immediate economic impact of the tariff deal between the USA and the UK will be minimal, but trade agreements in general are expected to boost long-term growth.
- The new trade deal between the USA and the UK, which promises to lower tariffs on steel and aluminum, has been met with optimism in the business world, with the S&P 500 up 0.97% and the Dow Jones Industrial Average up 1.02%.
- In the realm of politics, British Prime Minister Keir Starmer and President Trump share a common goal: boosting trade and creating jobs through this new agreement, which has the potential to smooth customs clearances for American goods and unlock billions in new export opportunities.
- The war of words between global leaders over tariffs has been a significant factor in the global economy for some time now. President Trump's imposition of 10% tariffs on foreign goods and 25% on cars, steel, and aluminum, among others, has sparked a global trade war.
- In the world of finance, the tariff deal between the USA and the UK is seen as a positive move that could help keep the looming recession at bay, as businesses in both countries stand to benefit from increased exports and improved trade relations.
