The United States and the United Kingdom have agreed to ease the trade tension between the two countries by deciding to implement a few sectoral measures related to automotive, agriculture and overall access to each other’s markets.
The overall duty rate on U.K. products will remain at 10%, while the U.S. will lift the 25% Section 232 tariff on the first 100,000 vehicles imported annually by U.K. car manufacturers. The duty rate applied to U.K. vehicles will be a reciprocal tariff rate of 10%. After the set quota has been met, importers of U.K. vehicles will pay a duty rate of 25%.
Also expected are alternative measures for steel and aluminum products. Nothing, however, is mentioned about the duty rate on auto parts. Unless further guidance is provided, the duty rate for auto parts remains unchanged.
In exchange, the U.K. is committing to reducing or eliminating tariff and non-tariff barriers and will further open its markets to U.S. products, especially agriculture and beef producers. The overall value of the market access for U.S. products is estimated at $5 billion, $700 million include ethanol exports and $250 million are agricultural products.
Besides automotive and agriculture, an important decision was reached about the duty-free import of aviation parts from Rolls Royce.
The U.S./U.K. trade agreement was quickly followed by renewed trade negotiations between the U.S. and China, including commitments to reduce tariffs. Whether these developments will set a precedent for future trade agreements remains to be seen.
