The newly announced US-UK trade deal has been welcomed as a diplomatic triumph – a long-awaited move towards easing post-Brexit trade tensions and renewed optimism in transatlantic economic cooperation. But behind the "zero tariffs" and "economic reassurance" headlines is a complex and skewed deal that might deliver short-term benefits to some British industries but catastrophic consequences for others.
In its core, the deal pledges "zero tariffs on some goods" and reduces an impending 25% tariff on UK car sales to a mere 10% on up to 100,000 vehicles annually. This was a huge reprieve for the UK motor industry, particularly manufacturers already struggling with a slowdown across the world and the lingering specter of Brexit. The British Motor Manufacturers Society welcomed the move as "a huge reassurance." The President himself stated that the UK was "very well protected" by the provisions of the deal, crediting his own personal affection for Britain with giving the deal momentum.
The deal, however, is far from settled. Industries such as steel and aluminium remain unresolved, and tariffs on these remain "a work in progress." Other British goods exports still face a flat tariff of 10%. It is effectively not a whole trade agreement but rather a piecemeal revision of tariffs that had already been unilaterally imposed by the US earlier this year.
The chaotic sequence of the signing ceremony itself – in which President Trump struggled with the document and Prime Minister Starmer awkwardly bent to retrieve it – was a graphic representation of the broader dynamics of the negotiations. Journalists such as Bloomberg's Brendan Scott presented the photograph as "an awkward symbol" of the way in which the UK has had to bend to the necessities of American interests. The transaction, he argued, must be seen not as an end but "the latest version" in an ongoing and lopsided process.
One of the most charged concessions in the deal is the removal of US tariffs on bioethanol – a step that threatens to strangle the UK's fledgling green fuels market. British producers like ABF's Vivergo Fuels and Ensus now face being undercut by subsidised US imports, risking factory closures and job losses. True, it is fair to say that corn ethanol is not necessarily the environmental energy solution it seems to be, but the sudden change has sent a whole industry into turmoil.
The "cars-for-farming" swap – additional American beef in exchange for additional British cars – underlines the bargains nature of the bargain. But whereas car motor manufacturers can breathe easy, British farmers and renewable energy entrepreneurs have reason to worry.
Final Thoughts...
Car manufacturers have done well, but it's really not clear whether there are any other winners here. There's a lot of ambiguities to be fleshed out going forwards....