The Farce of the Deal

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Last week, British negotiators signed a historic, comprehensive trade agreement with a major global economy—in India. They also inked a tiny, slapdash, informal farce of a trade “deal” with the United States.

The US-UK “deal” is the first and only one the US has negotiated since Trump paused tariffs above 10% on countries besides China for 90 days. In the short text of the agreement, the only actual tariff reduction America formally commits to is reducing the 25% car tariff to 10% for the first 100k vehicles exported from Great Britain. Washington promises to create a similar system for British steel & aluminum, but provided exactly zero details on what this actually means. In the press conference, US Commerce Secretary Howard Lutnick also promised that aircraft engines & parts would be exempted from US tariffs, but this was a lie—the official document does not even mention planes. In “exchange”, the US gets some tiny tariff-free quota for beef and ethanol exports. In practice, this means trade policy between the two countries is still several times more restrictive than before Trump took office.

To say this “deal” is tiny would be an understatement—it is microscopic. The United Kingdom is a relatively small US trading partner, only representing about 2% of American goods imports (that’s less than Vietnam, Taiwan, Ireland, India, or Italy), and this deal only reduced tariffs on about 14% of those British goods. The overall impact on US trade restrictiveness is functionally unnoticeable—the Trump administration’s quiet decision to indefinitely delay tariffs on Mexican/Canadian auto parts was roughly 5-6x more impactful. It would not be inaccurate to characterize this entire episode as basically a PR tour for slightly lower tariffs on Aston Martins & Bentleys.

If this is all that can be achieved with the UK, a close NATO ally who runs a trade deficit with the US and has long been desperate to sign a real free trade agreement post-Brexit, it does not portend well for other trade negotiations. Even assuming all non-China countries can achieve the same proportional reduction in their April 2nd tariffs as the UK, the average US tariff rate would still be 34% when the 90-day pause lapses in July. Keep in mind that the US would