US President Donald Trump boasted last week about a trade deal with the United Kingdom, which both he and British Prime Minister Keir Starmer hailed as “historic.”
Many economists, however, are questioning the scope of the agreement. Trump’s baseline 10% tariffs against British products, which are currently suspended for 90 days, will remain in place.
The conclusion of this agreement could form part of the discussions at a summit between the European Union and the United Kingdom on 19 May in London. This conciliation could strain ties between the European partners.
“I think it will cause a certain amount of irritation in Brussels. And it’s not because there’s a direct conflict between the EU and the UK. It won’t jeopardise the relationship between the EU and the UK. But it does set a bad precedent,” says Aslak Berg, a researcher at the Centre for European Reform.
“By authorising the maintenance of these customs duties, it reinforces the legitimacy of these customs duties, which are contrary to international law,” he continued, adding that the decision “will not cause permanent damage to relations between the European Union and the United Kingdom.”
The British peculiarity
Berg points out that the case of London is unique.
“The UK is in a different position to the EU in some respects. The UK doesn’t have a trade surplus with the US and that’s a big priority for the Trump administration.”
The researcher also glosses over more subjective factors. “Trump likes the UK. He likes being invited to Buckingham Palace. He liked the state visit. And he, Starmer, found a way to talk to Trump which enabled him to get on very well on a personal level. And that counts for a lot,” said Berg.
This agreement between the United States and the United Kingdom comes at a time when the EU is threatening to tax €95 billion worth of American products imported into its member states.
The European Commission has just launched a consultation on a list of goods that could be subject to this additional taxation. The list includes food products, automotive equipment, electrical equipment, aircraft equipment and batteries.
The Commission also intends to launch proceedings before the World Trade Organisation (WTO).
It is precisely in terms of international law that the trade agreement between Washington and London could cause difficulties for the EU.
“Politically, this is not necessarily a very good signal,” warns Ignacio García Bercero, a researcher at the Bruegel Institute.
“It was an important issue for the UK and the EU, along with other countries, to be in a position to be the holders of the WTO rules,” he adds.
For the researcher, the agreement reached between Washington and London is ultimately not particularly commercial.
“There is no doubt that it is not a free trade agreement. The main thing the UK got was better treatment on steel, aluminium and car tariffs. It got nothing on the 10% tariffs,” says García Bercero.
The “reciprocal” US tariffs apply to 20% of EU goods. The measure has been suspended for now, but it will be added to the 25% tax on European cars and automotive equipment entering the United States.
€379 billion worth of EU exports to the United States would thus be subject to new customs duties.
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