The US and the UK have finally agreed upon a deal to end Trump-era tariffs imposed on British steel and aluminium imports into the US, on a wide scale. It has also resolved the issue of retaliatory tariffs, placed by the British on American goods. The agreement looks to repair the relationship’s economic relations, having been strained over the last few years.
In 2018, the Trump administration imposed a 25% tariff on worldwide imports of steel and 15% for aluminium. This at its core was an attempt by the administration to try and protect jobs in these certain sectors by aiming to have prices of domestic producers be more competitive than foreign producers. Now, the agreement means that UK firms will be able to a certain quota of metals without tariffs and only the quantity exceeding the quota will be subject to tariffs. Following the imposition of tariffs in 2018, the UK retaliated with extra taxation on certain goods. This included Levi’s jeans, bourbon and more. It accounted for roughly $500 million good’s worth in trade. These extra taxes have also been removed. The deal will be effective from 1 June.
The UK has 80,000 people working in steel and aluminium sectors, therefore this was great news for these workers, as their jobs will be more secure with more stable and reliable trade.
This deal was similar to deals made with other American allies such as the EU and Japan. It is a symbol of the Biden administration looking to rebuild ties after the ‘America First’ policies and protectionism from Trump severed relations amongst these states.
It is arguable that the reason for the agreement with the UK only having been made so much later than other partners may be because the UK is no longer as big of a trading partner with the US anymore. Before Brexit, the UK’s trade deals were negotiated through wider EU trade deals. The EU is one of America’s biggest trading partners, whereas the UK only accounts for 5% of US imports. Therefore, the EU, being a bigger market and of more relevance to the US, would’ve been prioritised in getting issues resolved.
The next step would be for the US and the UK to move to negotiate a new free trade agreement. Post-Brexit, the UK has been looking for new free trade partnerships, and ever since the Brexit debate, the US has been an obvious choice for the UK, with there currently being the trade of around $260 billion between the two states. However, this is mostly dominated by US exports. This accounts for almost a fifth of the UK’s total trade.
Despite this, the US’ top trade negotiator, MS Tai, in an interview with the BBC, didn’t signal anything towards or against a new free trade agreement. The same logic from above could be applied here, as it is of less importance to the US and the UK will have more relative gain than the US.
Written by Florian Mihindukulasuriya Thiserage