U.S. President Donald Trump and British Prime Minister Keir Starmer shake hands on Monday at the G7 summit in Kananaskis, Alta., where the two finalized a trade deal.Stefan Rousseau/The Associated Press
British Prime Minister Keir Starmer has finalized a tariff deal with U.S. President Donald Trump, but the U.K. will continue to face steep duties on steel, aluminum and other products.
Mr. Starmer and Mr. Trump announced the agreement Monday during the G7 summit in Kananaskis, Alta. It builds on a framework the two leaders negotiated in May, which was unveiled with great fanfare.
Under the finalized version, the U.S. will cut its tariff on British cars from 27.5 per cent to 10 per cent, but only on the first 100,000 vehicles a year. Mr. Trump has also agreed to eliminate the 10-per-cent tariff on imports of British-made aerospace parts such as jet engines. In return, the U.K. has committed to easing import restrictions on U.S. beef and ethanol.
Mr. Trump has not lowered tariffs on British steel and aluminum, which the earlier framework called for. Imports from the U.K. will be subject to a 25-per-cent tariff, the rate that was in place when the May framework was announced. Mr. Trump has since raised that duty to 50 per cent for most countries, but not the U.K.
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The final agreement says the steel and aluminum tariffs will be lowered at a future date, once the U.S. has established a quota for British products. The U.K. has also agreed to “meet American requirements” on the “nature of ownership of relevant production facilities.”
That’s likely a reference to the Chinese owners of British Steel, the Jingye Group. The British government took over the operations of the steelmaker in April after Jingye officials announced plans to close the company’s blast furnaces in Scunthorpe, England, putting 2,700 jobs in jeopardy. The government has been looking for new investors and is considering nationalizing the company.
Other British exports to the U.S. will also continue to be subject to a baseline tariff of 10 per cent. Prior to Mr. Trump launching his global trade war in April, U.S. duties on British imports were around 3 per cent.
Mr. Starmer can claim some victory. He’s the first world leader to reach a tariff deal with Mr. Trump, and this agreement comes after Britain recently signed trade deals with the European Union and India.
“This is a very good day for both of our countries – a real sign of strength,” Mr. Starmer said Monday in Alberta.
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Mr. Trump said it was “a fair deal for both, and it produces a lot of jobs, a lot of income.” He also addressed a question about whether the U.K. would be protected from future tariffs by saying: “The U.K. is very well protected. You know why? Because I like them – that’s their ultimate protection.”
The British deal could set something of an example for Prime Minister Mark Carney. Mr. Carney and Mr. Trump have agreed to spend the next month negotiating an economic and security pact. It’s not clear what is under discussion or whether Canada will get tariff relief similar to Britain’s, although the Canada-U.S. talks appear to be more comprehensive and cover issues such as combatting drug trafficking.
Canada-U.S. Relations Minister Dominic LeBlanc says Canadian and American officials have agreed to meet again later in the week to discuss a deal to end the tariffs. Kirsten Hillman, Canada's ambassador to the U.S., says talks have been productive but the two sides are 'not there yet.'
The Canadian Press
The EU is also eager to strike a deal with Mr. Trump, but so far Brussels has taken a tougher position than Britain by preparing sweeping retaliatory tariffs against U.S. imports. On Monday, Mr. Trump criticized the EU’s approach. “We’re talking, but I don’t feel that they’re offering a fair deal yet. They’re either going to make a good deal or they’ll just pay whatever we say they have to pay,” he told reporters.
The British car industry welcomed Monday’s announcement. “This is great news,” said Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders. “We wait to see the full details of the deal and how it will be administered, but this will be a huge reassurance to those that work in the sector and bolster the confidence of our important U.S. customers.”
However, Britain’s largest ethanol producers said the agreement threatens to put them out of business.
The U.K. has agreed to drop its 19-per-cent tariff on the 1.4 billion litres of U.S. ethanol it imports every year. That “has created huge uncertainty for the U.K.’s strategically vital bioethanol industry and the 7,000 people who work within it,” said Paul Kenward, the chief executive of Associated British Foods, which operates the country’s largest bioethanol plant. Mr. Kenward said the agreement has put the future of its plant in Hull, in northern England, in doubt.
Britain and the U.S. enjoy a relatively balanced trade relationship, with neither country running a surplus in the exchange of goods. The trade in goods is worth about £113.7-billion ($210.4-billion) annually. However, trade in services – such as financial services and tourism – is far larger at £179-billion, and Britain has a surplus with the U.S.