The UK Trade Deal and What it Might Mean

On May 8, 2025, President Trump announced a "trade deal" with the UK. If you go to whitehouse.gov and read about it, you'd think it was a landmark deal, sure to stave off recession and make America's farmers and cattlemen rich beyond their wildest dreams. Well... don't believe everything you read. The deal isn't done yet and, in fact, it's not actually a trade deal at all, rather a series of tariff rate quotas.

So what's actually in this deal? We don't actually know all of the particulars yet and some things are actually still being discussed. What we do know is that cars from the UK, up to the first 100,000 imported will have a lesser tariff rate of 10%. After the 100,000 quota is reached, the rate will increase to 27.5%. Additionally, there will be a MFN status on aluminum and steel imports as well as aluminum and steel derivatives which will eliminate the section 232 duties for steel and aluminum for the UK. Different news outlest report that there will be a quota here as well, at least on derivatives but there is nothing solid so far as we can tell. The pharmaceuticals part of the deal is still being worked on as are digital services. Everything else from the UK will still have the 10% reciprocal tariff.

For the US side of things, the tariff for beef has been eliminated up to the new quota which increases to 13,000 tonnes. Sounds pretty good, but only a small portion of US beef will be allowed to qualify. The UK is sticking to strict EU guidelines about growth hormones so no HGP beef is allowed. Considering HPP is, by some estimates, up to 80% of the beef market, it's not the huge boon people pretend it to be. There is also an exemption for US Ethanol up to a 370 million gallon quota, which seems to be the bigger win.

But when all is said and done, what does this all really mean? Well, unless you're importing luxury cars or aluminum and steel, nothing. The rest of the tariffs still remain and Trump has even indicated that the UK got the best deal because they were first. Others might not fare as well. But if we look at it, there is no reduction of tariffs at all. Now, maybe this is because Trump is still holding to a minimum 10% for all countries (the UK was at 10% on April 2 anyway). Perhaps 10% is as low as any country can negotiate. But it's also a clear sign that tariffs aren't going away. Some of it may be due to the UK's unwillingness to remove EU regulations on farm imports (see HGP beef), but it seems a relitively small nail to hang your hat on. But I feel there is something else here.

We already know Trump loves the power, the feeling that he can make the world sigh or sing based on his decisions. Until he gets what he thinks he needs tariffs will not go away. They will continually be used as bargaining chips to further his agenda. What does that mean for the rest of the world as more "trade deals" come close?

It means that we shouldn't expect anyone's tariffs to go away. They may get reduced by July 9, but I wouldn't expect any country to have lower than 10%. Japan, South Korea, India and other countries have indicated that while they are receptive to making deals, the things that Trump wants to remove the most, like farm and vehicle subsidies and tariffs, they generally aren't willing to remove. So, any other deal that comes out, I'd still expect reciprocal tariffs to be a part of. This means that we might have a long and difficult summer with slower trade, especially those importing from China and Southeast Asia. Until the US economy and consumers start feeling the pinch of higher prices, it is unlikely the pressure will exist to move tariffs and reignite trade.