Last week, the Trump administration announced a "historical trade agreement" with the UK. If, by this, the White House means that the deal is the first instance of a country struck a deal to get rid of President Donald Trump’s tariffs on the global “liberation day”, then yes, technically, it’s historic. But, in plain terms, the only historical thing about the agreement is its vulnerability. If the UK deal is a role model for not reaching a deal with other countries, then Trump will have little to show chaos and disruption that his tariffs have been released, especially compared to what the United States could have.
The published terms of the UK deal provide a clear and complete commitment to back tariffs on only three product categories (Beef, ethanol and automobiles), or even partly. (For example, UK car exports will reduce U.S. tariffs by 10%, allowing up to 100,000 vehicles per year.) The precise handling of other products has not been determined. Everything else will be negotiated later, including unofficial obstacles, tariffs, procurement, intellectual property and digital trade. (This explains why Intend It was used 17 times in the five-page agreement. )
At the same time, there is still obvious bilateral stimulation. For example, the UK retains regulatory barriers to American agricultural products (such as chlorinated chicken and hormonal vegetarian beef) and the “digital service tax”, which has a disproportionate impact on the U.S. tech giants. On the U.S. side, Trump’s new 10% “reciprocity” tariff will be valid for everything undivided in the deal, meaning that today our average effective U.S. tariffs on allies and new trading partners are much higher than the 1% rate that was reached until recently. And, as many of the terms of the agreement are not determined, there is still uncertainty among companies and investors in both countries, especially given Trump's recent history of past trade deals.
The UK is a relatively small country with lower trade barriers and good relations with the United States and has long been seeking closer bilateral relations – including formal free trade domination negotiations initiated in 2020 to strengthen its both moderate post-economic economy. In other words, it has not become much easier for the United States to reach a trade deal, but this That's what we get. This result does not bode well for other negotiations with larger trading partners that restrict more severe U.S. trade and investment. The violent market response to Trump’s tariffs has forced him to make a quick deal, and whatever its merits are, other administrations will certainly understand.
The new protocol looks worse than the alternative. Trump abandoned the Trans-Pacific Partnership on his first day of his tenure in 2017, which aims to promote our ties with countries on China’s economic and geopolitical trajectory by reducing barriers to exports and investments to the countries of the agreement. After the outbreak of the United States, it was called CPTPP: an integrated and progressive agreement for the Trans-Pacific Partnership. The UK joined after pledging to remove almost all relevant taxes for the other 11 member products, while liberalizing and simplifying regulatory and other non-freight barriers to trade goods and services.
So if Trump only stayed in the TPP in 2017 (and perhaps there were some modest adjustments to cover his previous criticism of the deal) and supported the implementation of the Republican-controlled Congress, almost all export tariffs on the U.S. to the UK and other member states today would be or close to zero today. Non-Talif barriers to U.S. goods, services, digital trade and investment will also be reduced, and U.S. companies and consumers will enjoy better access to CPTPP members' exports.
The United States will also obtain from the procedural terms of the agreement. To join the CPTPP, the new party must meet various requirements, including addressing specific trade issues for current members. This process is exactly how Britain joined the deal, which the United States could have used to make concessions to issues such as agricultural product barriers and the aforementioned digital service tax. Since the agreement has been detailed and put into law, its benefits are stable and predictable. Moreover, because CPTPP, like all traditional trade agreements, balances the benefits between the parties and includes formal procedures for resolving disputes, is more likely and easier to implement than a unilateral agreement. If things go south, all parties will lose something. (It is this lack of balance that destined to agree to the "Phase One" agreement with China in its first term.)
Any secondary gains that U.S. companies may eventually see due to last week’s deal will dwarf the geopolitical tensions and market chaos caused by Trump’s tariffs. Those tariffs have destroy The overseas competitiveness of US exporters is in several aspects. They forced U.S. companies to pay more than foreign competitors for raw materials, parts and equipment, which accounts for about half of U.S. imports. They have enabled American businesses to accept revenge from foreign governments and consumers. Moreover, the slam of tariffs prompted other countries to sign agreements with each other, giving their companies an edge over boxing American rivals. In fact, just a few days before the announcement of the US-UK agreement, the British government signed a truly comprehensive agreement with India that would ultimately reduce tariffs on goods by 90%, while liberalizing trade in services, digital trade and immigration.
For U.S. companies that want to expand abroad, 95% of the world's consumers live in it.
Perhaps the new US-UK deal will eventually become a more traditional and comprehensive trade deal that both governments began in 2020. Until then, the agreement can only be considered an improvement in the all-day status quo. However, bilateral trade is significantly worse than what happened a few months ago, by comparison What might bethis is a complete tragedy.