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Tariffs

US-UK Trade Deal on Brink of Being Signed: Key Details and Implications

Strategic Insights

— 1 min read

Britain is set to win crucial parts of a trade deal with the US, in exchange for improved access to the UK for American agricultural products. The "cars-for-agriculture" deal will see Washington cut tariffs on British car exports from 27.5% to 10% for the first 100,000 vehicles shipped, while the UK will offer the US a zero-tariff quota of 13,000 tonnes of beef and 1.4 billion litres of ethanol. The deal, more than a month in the making, is expected to be signed off by President Donald Trump soon.

Key Takeaways:

  • The US-UK trade deal, signed on May 8, will lead to lower tariffs for British car exports to America in return for improved access to the UK for US beef and ethanol.
  • The deal will see the US reduce tariffs on British cars from 27.5% to 10% for the first 100,000 vehicles shipped from the UK.
  • In exchange, the UK will offer the US a zero-tariff quota of 13,000 tonnes of beef and 1.4 billion litres of ethanol.
  • The UK's bioethanol plants, which manufacture bioethanol used in E10 petrol, face closure due to the increased quota for cheaper US ethanol.
  • Steelmakers are waiting for the outcome of talks to finalise the quotas and conditions under which they will benefit from a deal.
  • Industry body UK Steel hopes the US administration will recognise the particular circumstances of the steel industry and provide a favorable agreement.
  • The deal is expected to be enacted by the end of the week, with legal instruments needed to cut UK tariffs in place as soon as the White House signs off.

Statistics:

  • 27.5%: the current tariff on US car exports to the UK after Trump's imposition of global "reciprocal tariffs" on April 2.
  • 10%: the reduced tariff on British car exports to America under the deal.
  • 100,000: the quota for the first 100,000 vehicles shipped from the UK, with the reduced tariff of 10%.
  • 13,000 tonnes: the zero-tariff quota of beef offered to the US by the UK.
  • 1.4 billion litres: the zero-tariff quota of ethanol offered to the US by the UK.
  • Over 1 month: the time frame over which the deal has been in negotiations.

Sources:

  • "US close to deal on UK-US trade agreement, Business Minister suggests". Article by Peter Foster, George Parker, and Gill Plimmer, dated [May 2023]

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