In his book The Art of the Deal President Trump said his style of deal making was “aim very high, and I then I just keep pushing and pushing to get what I want.” It isn’t clear what Keir Starmer’s approach was but the deal he agreed with America offers little for our economy and gives the USA far more of what they wanted.
It is two months since the President first announced higher tariffs across the board. The discussions since then were an opportunity to lift the threat of these higher costs remaining but disappointingly that has not been achieved – and the risk is the impact will be felt in fewer sales, jobs losses, and lower investment.
On car exports, the UK will be able to sell 100,000 cars a year to Americans with a 10 per cent tariff, or tax, paid on them. Any sales above this will be hit with a 25 per cent charge. In each of the last five years, the UK has exported more than 100,000 cars with total exports of £30 billion. A year ago the tariff was only 2.5 per cent and these higher costs will hurt one of our most important manufacturing sectors and the supply chains of small firms.
There was success with removal of tariffs on steel and aluminium exports to the US. However, it is not clear in the agreement when this will take effect - or how much steel will be allowed tariff free. And the size of this export market is far smaller than automotive, for example.
A last-minute addition by the President himself – following his own advice – was to secure the lifting of tariffs on large volumes of US exports of ethanol. Apparently the Prime Minister agreed to this while watching an Arsenal match. And the impact? Well, the UK industry was completely blind sided by this last minute concession and has warned it is causing great anxiety to employees and suppliers. That includes British farmers supplying wheat who will suffer.
Clearly this damage limitation deal was better than nothing but it fails to secure the market access UK firms enjoyed up until a few weeks ago and key details are missing. Trump also said the worst thing you can do in a deal is “seem desperate to make it.” Yet, the government’s approach has very much been to try and get the first deal ahead of other countries – we’ll have to see as more deals are secured by the Trump administration whether the UK has gained by jumping first.
We also know the government has been negotiating with the EU over a deal. The lack of transparency to Parliament is concerning as are reports about Labour planning to give up fishing access in return for defence cooperation and potentially making the UK a rule-taker again to remove some bureaucratic checks the EU is insisting on. This would be a big mistake and reflects the government’s underlying sympathies to be part of the EU again.
We will wait and see what the EU deal entails. But for now much more needs to be done to secure a proper US/UK trade deal – rather than this tariff agreement – to benefit firms here as well as the US. The government needs to continue negotiations to bring back such a deal. And they might even learn from President’s Trump’s approach to negotiation.
