London's Canary Wharf financial district. Britain was the first country to reach a deal with the U.S. after it imposed sweeping tariffs on dozens of its trading partners.Kevin Coombs/Reuters
The British government is trying to understand how its recently signed trade deal with the U.S. will be affected by a court ruling blocking most of President Donald Trump’s tariffs.
Britain was the first country to reach a deal with Mr. Trump after he announced sweeping tariffs in April on dozens of U.S. trading partners, including Canada. The U.K.-U.S. agreement, although limited, was hailed as a model for other countries hoping to win similar relief from Mr. Trump.
Under the deal, announced on May 8, Mr. Trump agreed to eliminate the U.S.’s 25-per-cent tariff on imports of British steel and aluminum. The President also agreed to cut the U.S. tariff on British cars from 27.5 per cent to 10 per cent, but only on 100,000 imported vehicles per year. The U.K. and U.S. also moved to improve market access for beef imports.
However, a baseline U.S. tariff of 10 per cent on imports of all other British goods remains in place. Prior to April, U.S. duties on British imports were around 3 per cent.
The U.S Court of International Trade ruled Wednesday that Mr. Trump exceeded his authority in introducing most of the tariffs, raising questions about the future of the U.K.-U.S. deal. The White House has vowed to appeal the decision and carry on with Mr. Trump’s aggressive trade policy.
A U.S. trade court on Wednesday blocked U.S. President Donald Trump's tariffs from going into effect, ruling that the President overstepped his authority by imposing across-the-board duties on imports from countries that sell more to the U.S. than they buy.
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British officials were hoping to speed up implementation of the recently signed trade deal during talks next week between trade officials. On Thursday, a statement issued by Downing Street said the court ruling was a matter “for the U.S. to determine domestically, and we note this is only the first stage of legal proceedings.”
The statement added: “We were the first to secure a deal with the U.S. in a move to protect jobs across key sectors, from autos to steel, and we are working to ensure that businesses can benefit from the deal as quickly as possible.”
The court decision won’t affect the U.S. tariffs on steel, aluminum or cars since they were imposed under different legislation. The ruling would affect the sweeping 10 per cent tariff on all other U.K. imports.
The London Stock Exchange’s FTSE 100 stock index opened slightly higher on Thursday but most of the gains were erased by noon British time.
“That the gains were measured rather than blockbuster reflects a healthy level of skepticism over whether this can truly rein in the Trump administration, which has already launched an appeal against the judgment,” said Russ Mould, investment director of Manchester-based A.J. Bell.
The court ruling “clearly adds another layer of complexity and uncertainty to what Trump is doing when businesses don’t know what tariffs their product would face in the U.S. That can’t be good for the economy,” said David Henig, director of the European Centre for International Political Economy a Belgium-based think tank.
The European Union has also been grappling with how to respond to Mr. Trump, who has threatened to hit the EU with 50-per-cent tariffs on all exports in addition to higher duties on steel, aluminum and cars. Those import taxes have been delayed until July, but Wednesday’s ruling will complicate negotiations.
EU trade negotiator Maros Sefcovic is expected to meet with U.S. Commerce Secretary Howard Lutnick in Paris next week.