Thu, 08 May 2025

Thu, 08 May 2025 US agreement leaves the UK open to do a much more significant EU deal

Economically this US deal is relatively small, although important to very specific sectors.

* The UK and US have agreed on a trade deal, which is seen as a key diplomatic win.
* This deal will allow the UK to negotiate a full EU trade agreement, including food standards.
* The deal rolls back some of the trade damage caused by Trump's original announcement, particularly for the car industry.
* The quota for car exports has been increased from 27.5% to 10%, saving British car exporters around £1 billion.
* However, this comes with limitations, including a 100,000 car cap and uncertainty over how foreign parts will be accounted for.
* Agricultural access for the US has also been agreed, but subject to quotas.
* Notable by their absence were moves on digital service tax and tariffs for US cars.
* The deal confirms that the 10% reciprocal tariff is non-negotiable and could have wider consequences.
* From the UK perspective, the tariff is seen as a tax on domestic consumers, while from the US it's viewed as a revenue source.
* The agreement may help keep the US sweet and leave room for a substantive deal with the EU, potentially leading to a "full fat" food and farm export deal.
* This could reduce post-Brexit red tape for key exporters.
* The UK is now seen as an oasis of trade and political stability in a tumultuous world, with good relations with the US, EU, India, and soon the Gulf too.
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