US-UK Trade Framework Marks a Strategic Breakthrough in Trump’s Tariff Strategy
Decoupling the U.K. from the EU by strengthening British manufacturing and American agriculture is a win-win for both countries.
The U.S.-U.K. trade framework announced on May 8 marks a landmark achievement in trade realignment that opens the British market to American agriculture, reduces barriers to American companies getting U.K. government contracts, and obtains key British-made supply chain components for the American aerospace industry.
The agreement followed the April 2 tariff enactments, which President Donald Trump called “Liberation Day,” aimed to liberate the American market by forcing countries to end their unfair trade practices with the U.S. In March, the U.S. raised tariffs to 25 percent on British steel and aluminum. The April announcement added a 25 percent tariff on British-made automobiles. This prompted the British government to negotiate and became the first country to successfully negotiate a framework for a new bilateral trade deal with the Trump administration.
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Better Late than Never
The U.S. and U.K. could have struck a trade deal during Trump’s first term if the U.K. had managed to proceed quicker with its exit from the European Union, the process known as Brexit. For years, Brexit skeptics argued that leaving the EU would leave the U.K. isolated, but this agreement proves otherwise.
Much of America’s support for Brexit stemmed from the desire to break up the EU trade bloc by peeling away America’s closest ally and the continent’s second largest economy. Despite the Brexit delay, the significance of signing the agreement on the 80th anniversary of Victory Day in World War II was not lost on the Trump administration and its British counterparts.
The biggest factor for the U.K. is the elimination of America’s 25 percent tariffs on British steel, aluminum, and car imports, which will give a much-needed boost to the U.K.’s industrial heartland. As in America’s heartland, globalism wreaked havoc on the British working class.
On the American side, the deal opens the British market to American agricultural products, particularly beef. The U.K. imports 40 percent of its food, but only two percent of that comes from the U.S. The U.K. will now allow up to 13,000 metric tons of tariff-free beef imports from the U.S., which will grow to 35,000 metric tons over seven years, valued at $420 million. This compares with the current rate of 1,000 metric tons tariffed at 20 percent.
American farmers have long sought greater access to the British market, considering the prevalence of beef in the British diet. The U.K. rejected American beef and chicken because American farmers wash chicken in chlorine and use hormones banned in the U.K. Although negotiators still have to work out the details of the final deal, U.S. Agriculture Secretary Brooke Rollins has conceded that American farmers will have to adjust their practices to meet growing international demand, adding that the chlorine wash practice has already declined to roughly five percent of the poultry market.
The deal won’t flood the British market with American agricultural products overnight. It will begin to break into the mainland European and Irish exports, which currently cannibalize the U.K. market. The National Cattlemen’s Beef Association’s Kent Bacus notes that a bilateral agreement between the U.S. and South Korea has made that country America’s top beef export market.
Additionally, the agreement opens more opportunities for American firms to compete in the U.K.’s public sector procurement market. The U.S. and U.K. form part of the 47-country World Trade Organization Government Procurement Agreement (GPA), which gives priority to firms in each member nation for government contracts. This aspect of the agreement will close loopholes that discriminated against American firms—against the spirit of the GPA.
The agreement also obtains necessary plane components vital to U.S. aerospace industry and national security by reducing tariffs on them to zero. A major concern over the past quarter century is that American aerospace and weapons manufacturers rely too heavily on China or other countries that are not guaranteed allies. This guarantees a safe, stable market in the future for companies like Boeing, which uses Rolls Royce engines. The agreement’s aerospace aspect represented a strong selling point to the U.K. as its $53 billion aerospace industry supports 450,000 jobs.
The U.S. stock market, which slumped considerably following the initial April 2 tariffs, responded strongly to the agreement, driven largely by airline and semiconductor stocks.
A Framework of Scalability
Critics contend that the deal is narrower than Trump and U.K. Prime Minister Keir Starmer suggest because of the impasse on the U.K.’s digital services tax or clarity on American tariffs on British pharmaceuticals. But it’s important to remember that this remains a framework—the details of which will be discussed behind closed doors for some time. The speed with which the U.K. agreed to it shows that even under Labour leadership critical of Trump, the U.K. continues to value its special relationship with the U.S.
This U.S.-U.K. trade agreement marks a long-overdue triumph of Brexit’s vision and allows the U.S. to reestablish itself as Britain’s key trade partner. For the U.K., it opens the American market to British steel and aluminum and enlarges it to British aerospace components. For the U.S., it strengthens American agriculture by opening another large export market, provides greater opportunities for American companies to get U.K. government contracts, and strengthens America’s aircraft manufacturers and national security.
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