Faisal Islam: The UK's Trump trade deal no longer looks world-beating
It has been a long road for President Trump as he looks for a justification to erect a tariff wall around the US, including against
It has been a long road for President Trump as he looks for a justification to erect a tariff wall around the US, including against key allies. From the opioid crisis to illegal migration, then the need to bring manufacturing back to America's shores, the list goes on. Through Trump's second term, there has been a new justification every month for the trade levies he is seeking to place on allies. Some have been overturned by the courts, others by economics and some even by their own logic. And so, Trump has now turned to accusing dozens of trade partners of trading in goods that have been produced using forced labour.
These are "tariffs in search of an authority", as one industry figure put it. The forced labour line shores up President Trump's tariffs against a challenge from Congress or the courts. In practice, the levies are curiously similar by country to a previous round of tariffs imposed supposedly for completely different reasons. The good news for the UK is that the regime effectively remains the same as before. What has changed is that our nearest neighbours in the European Union now have a much better deal than before, and in turn are in a better situation than the UK. While the UK and the EU each appear to have a 10% rate, the EU's is a flat rate, while the UK's will apply alongside other tariffs, such as a levy on cars above a certain number of units sold.
The government has struck effective side deals on medicines, steel, aluminium, cars and, with the help of King Charles, whisky. At the end of this process however the overall trade-weighted effective tariff rate for the EU (8.5%) could end up a bit lower than the UK's (6.8%). It should not matter that much, but the help given by doing the first deal, and by post-Brexit trade freedoms looks to have been short-lived. The British Chambers of Commerce trade expert William Bain points to the competitive advantage for EU exporters into the US in some sectors. The EU has secured better treatment because it has passed a ban on forced labour goods, which the UK has not.
This is not an accusation on the use of forced labour in supply chains. It is about the passing of specific legislation, mirroring the US ban on products that have used forced labour in supply chains.
The BriefWire