In the strongest showing of American-British solidarity since the Spice Girls posed with the stars and stripes, the U.S. and the U.K. have squashed their burgeoning trade war.
What happened: The U.S. and the U.K. agreed on a framework for a deal lessening U.S. tariffs. It would drop tariffs on U.K. vehicle exports to 10% from 27.5%, and erase the 25% tariffs on steel and aluminum. However, the baseline 10% tariff on most U.K. goods will remain.
- In exchange, the U.K. will allow more beef and ethanol imports from the U.S. and will work to streamline the processing of U.S. goods through customs.
Why it matters: This is the first bilateral tariff deal since Donald Trump upended global trade, and it could serve as a blueprint for ones to come with other major U.S. trade partners. If the deals that follow are similar, it likely means that any reductions will come with concessions to allow more U.S. imports and that a 10% blanket tariff is unavoidable.
- For Canada, this could mean back-pedalling on pledges to buy Canadian (or at least not American) in areas like defence.
Yes, but: The U.K. is one of the few targeted countries that already runs a trade deficit with the U.S., and it didn’t announce retaliatory tariffs. These factors could have netted a sweetheart deal other countries might not get. Plus, Trump really likes Keir Starmer.—QH