Dear Subscribers,
The UK and US have concluded a trade deal which will see some (but certainly not all) of the ‘Trump tariffs’ on UK exports reduced or removed (more below). The deal has come under fire for giving away too much and receiving too little in return, with the FT calling it “closer to a protection payment to a mob boss than a liberalising agreement between sovereign countries”.
The UK and India have agreed to a free trade deal, after years of negotiating. The deal would not have been possible were it for Brexit (indeed, the EU is still stuck in negotiations which began in 2022). Though some of the terms have attracted criticism from silly corners of the commentariat (in particular, national insurance contributions and visa rules for Indian workers), it is good to see the government embracing the freedom to forge an independent trade policy away from the confines of the Single Market.
A deal at long last
President Trump has said that “great progress” has been made in negotiations with China over trading arrangements between the world’s two largest economies. Treasury Secretary Scott Bessent is leading the negotiations in Switzerland. In the run-up to the talks, Trump indicated that he would be willing to cut the tariffs imposed a few weeks ago from 145% to 85% as a gesture of good will.
More worrying details are emerging about the upcoming UK-EU summit scheduled for 19th May. Reports indicate that there will be a joint commitment to the ECHR, despite growing calls for the UK to leave the convention, and there is a suggestion that UK negotiators are exploring plans to pay into the EU budget in exchange for access to the Single Market.
Preparations for “surrender summit” continue apace
Numerous opinion polls published this week show Reform leading the Labour Party (by more than ten points according to one pollster) and winning a Parliamentary majority were an election to be held. Nigel Farage is now the bookies’ favourite to be the next Prime Minister. Meanwhile, the conservative press is full of rumours of moves to oust Kemi Badenoch as leader of the Conservative Party after their disastrous local election results last week.
Media
Simon Jenkins on the death of the Conservative Party at the hands of Reform
Dillon Smith on Miliband’s chaotic obsession with Net Zero
Blog
Labour’s defence sell-out sweeps away our sovereignty by Kathy Gyngell
Keir Starmer’s drive to rebind Britain to Brussels takes a major and irrevocable step forward at the EU-UK summit on May 19. He is preparing to sign a new ‘reset’ deal with the EU that will sweep away our sovereignty.
This is not, however, a simple matter of re-fighting the Brexit negotiations because the landscape has changed, he explained. Reviving this plan ‘will place the UK in a far deeper commitment on foreign affairs and defence than it ever agreed to while a member of the EU’. Why? Because in the meantime the EU Commission’s powers have been expanded to include the control of funding for defence and foreign affairs, and it has also taken on the management of the work to create joint defence capabilities through the Capability Development Plan and the Capability Development Mechanism. The pact, he warns, ‘as a powerful instrument of EU policy’, will inevitably lead to the UK being dragged back into EU Treaty texts governing defence and foreign policy’
Could Trump be right and the critics wrong? By Robert Lee
Trump’s bold economic reset—via tariffs, cuts, and deregulation—aims to prevent a debt crisis and revive US growth. The UK must now follow with pro-market reforms.
And the awkward truth for Trump haters is that he has been proved right on key issues. He was right to be sceptical about lockdown, Europe’s freeloading on the US military budget, a Chinese lab the almost certain source of the Covid virus, China’s gross abuse of the global trading system, the counterproductive nature of the net zero agenda, the non-benign nature of many global institutions….I could go on.
Key Points
President Trump seems to view international trade as a zero-sum game in which one side always wins and another always loses. It should be a cause for concern, then, how much he has made of the US-UK deal agreed this week. A quick glance through the broad terms of the agreement show that it is rather one-sided:
- The blanket 10% tariff imposed on UK exports to the US a few weeks ago will remain, with the trade deal carving out some limited exceptions.
- UK car sales will be subject to a quota of 100,000 (lower than recent sales) which will be subject to the 10% tariff rate. Any additional cars imported to the US will be subject to a tariff of 25%.
- US exporters will be able to sell 13,000 tonnes of beef to the UK tariff free. UK exporters will likewise have a quota of 13,000 tonnes of beef, but it is unclear whether they will be subject to tariffs or not.
- UK exporters of aluminium and steel will be subject to a quota with additional ownership requirements, the intention seemingly being to stop Chinese-owned firms exporting to the US.
- UK pharmaceutical companies will be given preferential treatment, subject again to ownership requirements and supply-chain requirements to prevent Chinese-made drugs entering the American market.
- On digital trade, the deal outlines “ambitious aims”, but there are no detailed terms.
The bottom line is that the UK seems to be reducing or removing many more barriers to US imports than the US is to UK imports. This may be good for UK consumers, but it is unlikely to enthuse UK exporters whose businesses have been disrupted by the Trump tariffs.
