Hooray! A Tentative Deal with the UK, Only 199 Deals to Go
Trump worked out a deal with the UK, a US trade surplus country.
One Down, 199 to Go
We have the first deal (with details to be worked out later).
Please note Trump Announces “Breakthrough Trade Agreement” with U.K.
Speaking from the Oval Office, Mr. Trump said a “breakthrough” deal with the U.K. would include “billions of dollars of increased market access for American exports,” specifically agricultural products. He added that the U.K. would “reduce or eliminate” numerous nontariff barriers.
The final details are being written and will be delivered in the coming weeks, the president said.
“We still have our 10% tariff on which will produce $6 billion of revenue for the United States,” said Commerce Secretary Howard Lutnick during the White House briefing, referring to a 10% tax on imported goods from all U.S. trade partners, including Britain, imposed by Mr. Trump in April.
“This is a really fantastic, historic day in which we can announce this deal between our two great countries,” Starmer said over the phone during the White House announcement. “I think it’s a real tribute to the history that we have of working so closely together.”
Britain says the deal will cut tariffs on U.K. cars from 27.5% to 10% and eliminate tariffs on steel and aluminum, adding that the agreement sets a quota of 100,000 U.K. vehicles that can be imported to the U.S. at a 10% tariff.
Mr. Trump has not specified when agreements with other countries would be announced, but said that more deals are to follow.
While testifying on Capitol Hill earlier this week, Treasury Secretary Scott Bessent addressed the timeline for trade deals: “I’d be surprised if we don’t have more than 80% or 90% of those wrapped up by the end of the end of the year. And that may be much sooner,” he said, referring to countries with which the U.S. has trade deficits.
Some experts, however, believe negotiations will take longer.
Han-koo Yeo, a senior fellow with the Peterson Institute for International Economics believes that countries with whom the Trump administration is negotiating will have it in their interest to move slowly in their trade discussions. That’s because of the longterm implications these deals will have, the former South Korean trade minister told CBS MoneyWatch.
Negotiations will likely drag past May into June, according to Ian Bremmer, president of the Eurasia Group, although some countries might be motivated to act quickly.
“Everyone facing negotiations has been told to submit letters with their ‘best offers,’” Bremmer said in an email to CBS MoneyWatch, “and smaller countries that desperately want/need deals are complying.”
A Deal Is Only as Good as Trump’s Word
While it’s hard to predict what any potential tariff deals might include, Yeo, who has helped orchestrate several bilateral and mulitlateral trade negotiations in the past, said such agreements would likely be nonbinding “gentlemen’s agreements” or memorandums of understanding.
In other words, the U.S. could come to an agreement with a trading partner only to renege later on by issuing additional tariffs.
“The framework deal is only as good as the nice piece of paper that you write it down on,” said Eurasia’s Allen. “Trade deals are very, very complex animals, and you’re going to get probably top line agreement on some key issues of concern with a promise to come back and negotiate other things,” he said.
Framework for a Deal
The Wall Street Journal discusses the “Deal Framework“
The pact, which appeared to have been put together hastily by U.S. and British officials, is fairly limited in scope. The Trump administration agreed to roll back tariffs imposed on British steel and automobiles in exchange for purchasing Boeing jets and giving American farmers greater access to U.K. markets.
Under the deal, most U.K. goods will still be subject to the global 10% tariff the U.S. imposed on all countries in April. But U.K. steel and aluminum will be exempt from the U.S.’s 25% levy and U.K. car tariffs will be lowered to 10% from 25% for the first 100,000 vehicles.
In return, the U.K. is cutting tariffs on some U.S. beef imports from 20% to zero. The U.K. will also cut tariffs on ethanol. U.K. officials say that they are continuing to negotiate with Trump officials to reduce the baseline 10% tariffs the U.S. imposed. U.K. officials said the legal framework for the tariff reductions had yet to be signed.
The agreement, launched with great fanfare in the Oval Office and with U.K. Prime Minister Keir Starmer dialing in, fell well short of a full trade deal that the U.K. has wanted for years. But it allows the U.S. president to show progress in getting something in return for the hike in tariffs that have spooked financial markets and added to growing gloom about the economy, including worries about higher consumer prices that have hurt the president’s approval ratings.
Holger Schmieding, chief economist at Berenberg, a German bank, said the deal offers hope for “a series of deals to contain the damage from the Trump trade wars, which otherwise would hit U.S. consumers and U.S. businesses very hard.”
But he said the deal is “almost irrelevant for the U.S. because there are not that many U.S. goods imports from the U.K.—the U.S. imports almost nine times as many goods from the European Union than it does from the U.K.” The EU said earlier Thursday it could target American cars, car parts, airplanes and other products with tariffs if negotiations with the U.S. break down, and released a list of American products, valued at about $107 billion, that it says could face tariffs.
Deal Almost Irrelevant
That is what my charts show. I spent the morning adding UK to a number of charts and creating new ones.
The EU is nowhere close to a deal. Nor is China, Canada, Mexico, or Japan.
In fact, the EU is talking of escalating the trade war.
US Trade with the UK – Goods Only
We have a deal, with a surplus country, one whose trade with the US is relatively minor.
US Balance of Trade – Goods Only 10 Select Countries Plus EU
US imports and Exports – Goods Only – China, Canada, Mexico, EU, Vietnam
To put the deal into perspective here is an updated charts of select countries.
Deals Nowhere in Sight
- Canada: Balance -64 Billion
- Mexico: Balance -172 Billion
- Japan: -68 Billion
- China: -295 Billion
- EU: -236 Billion
Deal Announced
- Japan: Balance +12 Billion
Total 2024 Trade (Imports + Exports)
- Mexico 840 Trillion
- Canada: 762 billion
- China: 583 Billion
- EU: 966 Billion
- UK: 148 Billion
Fact Check on Trump’s Claim “We Don’t Do Much Business with Canada”
In case you missed it, please see my Fact Check on Trump’s Claim “We Don’t Do Much Business with Canada”
“We don’t do much business with Canada from our standpoint, they do a lot of business with us.”
OK we have a deal.
Strike that. We has a framework for a deal.
And “The framework deal is only as good as the nice piece of paper that you write it down on” which means worthless.
The UK is advised to treat that framework as good as Trump’s word.
That means it’s worthless.
Correction
I said 300 deals for trump but in the Time interview, Trump said 200.
For discussion, please see Trump Tells Time Magazine He Has Made 200 Deals Already, Refused to Name Any
I’ll be finished. Now, some countries may come back and ask for an adjustment, and I’ll consider that, but I’ll basically be, with great knowledge, setting—ready? We’re a department store, a giant department store, the biggest department store in history. [Emphasis Added]
Your trade adviser, Peter Navarro, says 90 deals in 90 days is possible. We’re now 13 days into the point from when you lifted the reciprocal, the discounted reciprocal tariffs. There’s zero deals so far. Why is that?
No, there’s many deals.
When are they going to be announced?
You have to understand, I’m dealing with all the companies, very friendly countries. We’re meeting with China. We’re doing fine with everybody. But ultimately, I’ve made all the deals.
Not one has been announced yet. When are you going to announce them?
I’ve made 200 deals.
You’ve made 200 deals?
100%.
I’m just curious, why don’t you announce these deals that you’ve solidified?
I would say, over the next three to four weeks, and we’re finished, by the way.
You’re finished?
We’ll be finished.
Oh, you will be finished in three to four weeks.
This post originated on MishTalk.Com
Thanks for Tuning In!
Mish
