Later today, Donald Trump is reportedly set to unveil a trade deal with the UK. He’ll make the announcement alongside ‘a big and highly respected country’ which is said to be Britain. If the reports are true then it would make the UK the first country to secure a deal since Trump’s tariff turmoil began.
The announcement will come at 3 p.m. UK time and could be worth billions in what would be an unarguable win for Rachel Reeves and Keir Starmer.
Britain has already been somewhat shielded from the president’s wrath (and tariffs) because our trade in goods with the Americans is pretty much balanced (roughly £59 billion each way). Instead of selling physical things we’ve become America’s call centre with lots of services sold into the states because of how cheap it is to pay Brits compared with Americans.
The announcement will come at 3 p.m. UK time and could be worth billions
The deal would likely build on that, making it even easier for service firms to do business across the Atlantic. It would also most likely see a reduction in UK imposed tariffs on cars and US farm products – though don’t expect chlorinated chicken on the menu.
The main focus of the deal is likely to be on areas of tech that both countries consider the key to unlocking the next era of economic growth. America is the UK’s single biggest trading partner so the potential benefits from any deal are not insignificant. Though we’ll have to wait for the finer details to see the true effects.
The car industry will be looking closely at what it means for the sector. America buys more British cars than any other country and cars are our largest export to the states in terms of cash value. Removing the 25 per cent tariffs currently imposed on car imports to the US would give companies like Jaguar Land Rover a significant competitive advantage in US markets.
After reports of the preliminary deal came out this morning the pound rose against the dollar as markets reacted to the positive news – something the Chancellor badly needed. Reeves has seen herself become one of the least popular ever inhabitants of No.11 Downing Street but, as I wrote recently, there’s a world in which her fortunes begin to turn. The Bank of England will almost certainly cut interest rates today to bolster growth and analysts had already expected Trump’s impact on the global economy to be deflationary for the UK.
Even the Tories are now giving Reeves her dues: ‘A Comprehensive UK US trade deal eliminating tariffs on UK exports would be welcome and another Brexit benefit. Restoring growth to the UK economy also requires reversing Labour’s attacks on business and cutting “Red Ed’s” ruinously high energy costs,’ said Andrew Griffith, Shadow Trade Secretary.
If the benefits of any deal can be quickly realised; if inflation stays low enough to allow the Bank to continue to cut rates; and if growth creeps up above the dismal level it is forecast to stagnate at, then it just might allow Reeves to turn the narrative around.
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