Despite a much-hyped “landmark” trade deal between the U.S. and the U.K., the reality is far from tariff-free. Even with Britain’s historically close ties to the United States, President Trump’s administration has settled on a 10% baseline tariff on most goods. This deal, the first of its kind since Trump’s reciprocal tariff announcement, leaves many wondering what this means for future trade agreements.
The agreement, reached on Thursday, offers some tariff relief. The U.K. can export 100,000 vehicles annually at a 10% rate, while additional vehicles face a steeper 25% duty. British steel and aluminum industries secured tariff-free access, a significant improvement from the 25% previously imposed. However, the vast majority of goods imported from the U.K. will still be subject to that 10% baseline tariff – a figure Trump himself described as the lowest country-specific tariff to be applied.
Trump’s comments suggest this 10% tariff might be the best deal other countries can hope for. He stated that the tariff is a “low number” and that tariffs for countries with larger trade surpluses will likely be much higher. Analysts from Goldman Sachs and JPMorgan concur, predicting that a 10% tariff on most goods from most countries is a realistic expectation.
While this deal provided some concessions to the UK in specific sectors like auto, steel, and aluminum, the limited nature of these exemptions raises concerns. For example, the cap on tariff-reduced vehicle exports effectively limits the market share for major British automakers like Jaguar Land Rover, benefiting instead U.S.-based assemblers. The deal’s overall impact on trade facilitation between the two countries seems to be overshadowed by its contribution to the broader U.S.-U.K. political relationship.
The lingering 10% tariff could significantly impact both the U.K. and U.S. economies. Experts warn that the average U.S. tariff rate remaining in double digits will negatively affect real incomes and slow economic growth. The deal serves as a stark reminder that even close allies may not escape the effects of President Trump’s protectionist trade policies.
