UK-US Strike Trade Deal Affirming ‘Special Relationship’

Welcome to the era of “balanced trade,” at least according to Commerce Secretary Howard Lutnick. That’s how the Cabinet member described the outcome of a new trade deal with the United Kingdom, which President Trump announced in the Oval Office on Thursday.

But while it’s the first agreement of its kind since Washington imposed taxes on global imports last month, many details remain foggier than an Earl Grey tea with a splash of milk, leaving its impact in doubt.

Beef Wellington from Washington

Britain was America’s ninth-largest trading partner last year, trailing Vietnam and besting India, but it only accounted for about 3% of all US trade. During that time, the US sent $79.9 billion in goods to the UK and imported $68.1 billion, according to Census Bureau figures, meaning America had a trade surplus of $11.9 billion with its onetime colonial ruler. 

Trump’s new deal will only touch on a fraction of that trade relationship. Britain’s car industry will see US tariffs immediately slashed to 10% from 27.5% on as many as 100,000 vehicles per year. A 25% US tariff on steel and aluminum imports announced in March goes to tariff heaven and plane parts will enter the US untaxed as well. The UK, for its part, is removing levies on many US agricultural products, notably beef and ethanol — UK beef farmers are getting a 13,000-ton tariff-free quota to sell to the US. However, the UK isn’t budging on its food standards, the primary obstacle for US exporters, which include a ban on growth hormones that American farmers commonly use in beef production.

In an interview with Fox News, Agriculture Secretary Brooke Rollins conceded that there remain “a lot of details to be worked out.” She will lead a delegation to the UK to discuss the “agreement in principle” next week. But with such a limited deal, there were already questions about just how consequential this “historic trade deal” — in Trump’s words — could be:

• Consumers will get only a limited reprieve as Trump’s 10% blanket tariff on most UK goods will remain in place. “The president has struck a deal that will lower the price of Rolls-Royces, Bentleys, Jaguars, Aston Martins, Range Rovers, and Minis,” tweeted University of Michigan economist Justin Wolfers.
• Economist and Apricitas newsletter author Joey Politano, using US Census data, calculated that global “US tariff rates only fell a total of 0.06%,” adding the UK deal “was nowhere near a major reduction in Trump’s massive trade war.”

British Airways parent IAG announced Friday that is it buying 32 new Boeing planes, after Lutnick said an unnamed UK airline would buy $10 billion worth of the aircraft. IAG CEO Lluis Gallego, however, stressed in an earnings call that the Boeing deal was hammered out before the US-UK trade deal was announced. Additionally, IAG said it was buying 21 planes from Boeing’s European rival Airbus.

One Size Fits Y’all: The UK, with which the US has long enjoyed what both countries termed a ‘special relationship,’ has been angling for trade deals since Brexit removed it from the EU Customs Union, meaning negotiations may have been a tad less quarrelsome than they will be with other nations. Trump even held talks on a “very substantial trade deal” with Britain during his first term. The EU, of note, announced Thursday that it is readying to punch back at the US on trade: Officials said they have identified $107 billion worth of US goods that may be hit with higher tariffs to counter Trump’s announced and enacted duties. Officials also said they will consider launching a World Trade Organization complaint against the US.