US-UK trade deal: What it should contain

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As I write this, we are awaiting the announcement of the US-UK trade deal from the White House, with reaction from UK Prime Minister Sir Keir Starmer.

My asks for this deal are simple:

  1. Reduction of all tariffs to lower than they were before liberation day, with no baseline tariff on UK imports, no steel and aluminum tariffs, lower UK tariffs on US car imports, and so on;
  2. The opening up of UK markets to US agricultural exports like beef and chicken;
  3. A reduction or elimination of the UK Digital Services Tax on US tech companies;
  4. A mechanism whereby UK firms investing in the US are able to import the inputs they need tariff free to the factories they have built that provide American jobs; and
  5. Some sort of deal on financial services, helping US banks and UK banks to compete without red tape.

In addition, tackling the problem of non-tariff barriers via mutual recognition (e.g., pharmaceutical safety) would be ideal.


UPDATE: The trade deal has been announced, with high praise on its contents from both parties. The US and UK press releases contain some interesting differences in emphasis.

As far as my aspects to look for go:

  1. The baseline tariff remains in effect and appears to be a sine qua non. No US trade deal will have a universal tariff lower than 10 percent. This will raise costs for Americans. Steel and aluminum tariffs have indeed been reduced, with the UK saying they have been reduced to zero. It is unclear whether UK tariffs on autos have been reduced.
  2. The UK appears to have agreed to reduce its barriers to US agricultural exports, although the details remain to be negotiated, according to the US Agriculture Secretary at the press conference.
  3. The UK Digital Services Tax remains in effect, but the parties are negotiating a new a new “digital trade deal.”
  4. UK firms with factories in the US will presumably still have to pay the 10 percent baseline tariff.
  5. There was no mention of financial services in the details on either side, but Lord Mandelson, the UK Ambassador to the US, did stress the importance of services, including financial services, in the press conference.

All told the US has raised its tariffs overall, and the UK has lowered them from an already low base. We are left with a worse situation for US imports of UK goods than before “Liberation Day,” but nowhere near as bad as it could have been. US exports seem to be in a better position. The agreement, with so much left to negotiate, appears to be a damage limitation exercise for the UK. The costs to American consumers remain to be seen.