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PaperclipPerfector  5d ago (text post)   24090 thread views

Culture War Roundup for the week of May 5, 2025

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The UK and US have announced a trade deal.

Key terms (based on press releases - apparently the text hasn't been agreed yet):

  • US continues to charge a default 10% tariff on imports from the UK
  • Up to 100k cars per annum are exempt from the 27.5% tariff on cars, but still pay the flat 10%. Not clear whether car parts are included.
  • British steel, aluminium, and aeroplane parts (this mostly means Rolls-Royce jet engines) enter the US tariff-free. The US announcement implies that there is going to be some still-to-be negotiated quota arrangement on steel.
  • UK will be exempted from future pharma tariffs
  • Both sides cut tariffs on agricultural products, including beef and corn ethanol. The tariff cuts are reciprocal but benefit the US more than the UK because of the balance of farm trade. Scotch whisky is not included.
  • The US announcement says that the UK will cut non-tariff barriers on US agricultural exports, the UK announcement says that the UK is not going to relax food safety standards.
  • The US is trying to rhetorically link the deal to a $10 billion order for Boeing planes that "a British company" (presumably British Airways) is going to announce imminently.
  • Nothing on services - in particular the UK isn't going to cut our Digital Services Tax (which is mostly paid by US tech companies on their UK revenue).

Initial thoughts:

  • This is a thin deal. Both sides are drastically overegging it in their press releases.
  • This is worse for the UK than status quo ante (because of the 10% flat tariff), although given the current salience of steel in the UK Starmer has a good chance of spinning zero tariffs on steel as a big win. The US has aggressively protected its steel industry for a long time (under administrations of both parties) and US tariffs on British steel have been a long-running grievance.
  • This is probably the best deal the UK could have got. It is better than any deal we could have got quickly as an EU member, but not necessarily better than the deal the EU could have got after a protracted trade war with pain to both sides.
  • The benefits to the US are pretty trivial - the farm tariff cuts affect about $1 billion of US exports. The US's biggest ask in trade negotiations with European countries is on food safety standards, and they didn't get it.
  • The two sides are sufficiently confident that they can fill in the details that they announced the deal before the text was finalised. I find this surprising - there are a couple of major bear pits where the two sides announcements are not aligned. The obvious one is non-tariff barriers on food. The less obvious one is that the US announcement claims a $5 billion opportunity from changes to UK public procurement, but not what they are. This is an extremely politically difficult area in the UK because of NHSism.

Thoughts on the politics:

  • The US announcement explicitly calls out the US cutting tariffs on British aeroplane parts as a win for US manufacturing. I think this is the most public acknowledgement to date that tariffs are hurting American manufacturing by disrupting supply chains.
  • Trump admin spin (though not the official White House announcement) is that the big win for the US is that the 10% tariff stays in place, and this represents the US collecting $6 billion in taxes on British businesses. That is what you say if you are defending a thin deal.
  • Conservative leader Kemi Badenoch has attacked the deal as worse than status quo ante. A few dissident Conservatives have praised Starmer for taking advantage of Brexit to get a better deal than we could in the EU.
  • The Liberal Democrats are not attacking the substance of the deal - we are saying that Parliament must have a chance to approve the final text.
  • The Scots are going to say that their whisky industry was thrown under the bus.
  • Farage hasn't spoken yet.

The Scots are going to say that their whisky industry was thrown under the bus.

They shouldn't cry too hard, the recent India-UK trade agreement drastically slashed tariffs on British liquors, and given the ridiculous demand for those in India (so many people clamor to have me fill up my luggage with scotch for them)..

This is mostly a joke. I'm sure the US market is larger and obviously wealthier.

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