The Trump administration announced May 8 “a historic trade deal” with the United Kingdom that it said “sets the tone for other trading partners to promote reciprocal trade with the United States.” However, as of press time each side had released only fact sheets concerning the agreement that offer few details, and additional negotiations are expected.
For more information on this agreement, please contact Nicole Bivens Collinson at (202) 730-4956 or via email.
Tariffs
The agreement will not eliminate the 10 percent “reciprocal” tariff the U.S. is imposing on imports from the UK, though British officials indicated that “work will continue” on that issue.
The U.S. has, however, pledged to negotiate “alternative arrangements” to its Section 232 tariffs on UK autos, steel, and aluminum. This will include (1) allowing 100,000 vehicles to be imported from the UK at the 10 percent tariff rate, with additional vehicles subject to a 25 percent tariff, and (2) “a new trading union for steel and aluminum” that will apparently include suspending the 25 percent tariffs on those goods.
In addition, the UK said the U.S. has agreed to give it “preferential treatment in any further tariffs imposed as part of Section 232 investigations.” The U.S. has a number of such investigations still pending on goods such as copper, timber, pharmaceuticals, semiconductors, and critical minerals.
According to the UK, the agreement makes no changes to the country’s digital services tax but provides for negotiations on “a digital trade deal that will strip back paperwork for British firms trying to export to the U.S.” In February President Trump directed the Office of the U.S. Trade Representative to determine whether to renew Section 301 investigations of DSTs imposed by the UK and other countries. Several years ago USTR proposed additional tariffs of up to 25 percent on $2.1 billion worth of imports from those countries after finding that their DSTs would discriminate against U.S. companies, but that proposal was suspended and ultimately terminated.
Other
According to the fact sheets, the agreement also:
- ensures streamlined customs procedures for U.S. exports;
- establishes high-standard commitments in the areas of intellectual property, labor, and the environment;
- maximizes the competitiveness and secures the supply chain of U.S. aerospace manufacturers through preferential access to high-quality UK aerospace components;
- creates a secure supply chain for pharmaceutical products;
- closes loopholes and increases U.S. firms’ competitiveness in the UK’s procurement market;
- includes “billions of dollars in increased market access for American exports, especially in agriculture;”
- will establish a UK tariff-rate quota on U.S. ethanol, with a zero duty for imports under the quota; and
- commits the UK to “reduce or eliminate numerous non-tariff barriers” (the U.S. highlighted the UK’s “non-science-based standards” on agricultural products, but the UK asserted that “there will be no weakening of UK food standards on imports”).
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