Trump Trade War Diary — May 8, 2025
US and UK announced the first trade deal under the new Reciprocal Tariff Policy. here are the key points of the agreement:
The UK-US trade deal, announced on May 8, 2025, marks a significant development in the economic relationship between the two countries, though it has limitations and areas for potential future expansion.
Key aspects of the deal include:
Automotive sector: The UK can export 100,000 cars annually to the US at a reduced tariff of 10%, down from the previous 27.5% 3.
Steel and aluminium: Tariffs on these products have been reduced from 25% to zero 3.
Agricultural concessions: The agreement includes “reciprocal” market access for beef, with UK farmers receiving a tariff-free quota of 13,000 metric tonnes. The UK will also remove tariffs on US ethanol 3.
Digital services tax: Contrary to earlier speculation, the deal does not include “cuts or concessions” to the UK’s digital services tax on global tech companies 5.
Future tariff protection: The UK has secured preferential treatment on any potential future US tariffs on pharmaceuticals and semiconductors 6.
Technology partnership: The deal lays groundwork for future UK-US collaboration in sectors such as biotech, life sciences, quantum computing, nuclear fusion, aerospace, and space 6.
However, the agreement has limitations:
A 10% tariff remains on most goods imports to the US from the UK 7.
The deal is seen as a “less bad outcome” for the UK relative to the tariffs it faced before Trump’s inauguration, rather than a comprehensive free trade agreement 8.
There are potential legal questions regarding the deal’s compatibility with World Trade Organization rules, particularly the “most favoured nation” principle 5.
The agreement is viewed as a starting point for future negotiations. UK Prime Minister Sir Keir Starmer is expected to build on these ties to further reduce mutual tariff and non-tariff barriers 8. Additionally, the UK’s refusal to grant significant concessions on food and animal welfare standards, while limiting the scope of the US deal, may improve prospects for a more comprehensive UK-EU trade agreement on foodstuffs 8.
In conclusion, while the UK-US trade deal offers some immediate benefits, particularly in specific sectors like automotive and steel, it is seen as an initial step in ongoing trade negotiations rather than a comprehensive agreement.