Is the UK-US trade deal a win for Starmer?
In what has been hailed by trade experts as “the biggest week for UK trade since Brexit,” the UK has struck the long-awaited trade deal with the US, just over a month after – so-called ‘Liberation Day’ – tariffs were announced.
This is the US’ first bilateral deal since these tariffs were imposed. But it’s unclear exactly what the deal will entail, with full terms yet to be released.
Most industries are still subject to the baseline 10 per cent tariffs, indicating the UK government was unable to make gains on most fronts.
“This is not an agreement. This is a press release masquerading as an agreement,” Matthew Oresman, partner at the law firm Pillsbury, told City PM. “The devil is in the details on this.”
The trade deal was meant to keep President Donald Trump’s reciprocal tariffs off “sensitive sectors” when it comes to international trade, according to trade experts.
What did the UK concede? Despite speculations, we didn’t give up the Digital Services Tax, though there are rumours this was withheld as an ace to play in future negotiations.
“There already is a large amount of cooperation. But the way it was framed, it was like the UK was going to be doing something beyond what it is already doing, which I’m going to guess is something targeting China, but it’s unclear,” one trade expert told City PM.
A tale of two wars
Trump’s team spun a yarn about the negotiation process. The American Secretary of Commerce, Howard Lutnick, went to great lengths to impress upon the world that this deal was Donald Trump’s personal triumph: “He’s the closer.”
This was met with Prime Minister Keir Starmer’s own take on the process: “People along the way were urging me to walk away … we did the hard yard and we stayed in the room.”
This was, according to Starmer, accomplished through the virtues of “patience … pragmatism,” and “not doing politics as performance.”
Starmer doubled down on the Americans’ narrative on this momentous deal being struck on VE day, marking the culmination of eighty years of “being the closest of partners.”
Starmer said it was “fitting” that they would, today, “renew the bond.”
The timing of the trade deal, however, was not planned. In a show of good humour, Peter Mandelson, the UK’s ambassador to the US, thanked the President for his “typical eleventh hour intervention” and “demanding even more out of this deal than any of us expected, the Prime Minister was delighted, obviously, to take that call in the middle of the night.”
Starmer testifies to this, having said “I didn’t know the exact day [the deal would be announced] – I wouldn’t have been having my phone call with President Trump halfway through the second half of the Arsenal-PSG game had I planned it better, but that’s the way it turned out.”
The trade deal details
The US’ tariffs on the £10bn-worth UK cars exports were set at 25 per cent, with steel and aluminium exports being a close second on the UK’s agenda, worth £3bn.
Keir Starmer made his speech from the Jaguar Land Rover factory to signal the centrality of the UK’s automotive industry to this deal (after a mishap saw reporters sent to the wrong factory).
Free speech “was not part of the conversation” and was purely “economic” said Lutnick. Trump added that “this was about business religion… semi-religion, but not nearly as important, I don’t want to get myself into [trouble].”
A senior Labour MP told City PM that keeping chlorinated chicken out of our supermarkets was a major priority for the government while Starmer said “red lines on standards, particularly in agriculture” were “written into the agreement.”
Starmer was cautious not to further upset UK farmers, as they have not been too pleased with the Labour government in the past few months, with tractors having descended on Whitehall in droves.
Though a trade expert says that, from what we know, there has been a “pseudo-concession at the very least” on agriculture.
While Trump admitted he “didn’t really know” about the UK’s agricultural capacity, on the other hand, he was impressed by Mandelson’s “beautiful accent.”
New strategy bears fruit
“This has been years in the making. Nobody was getting it done. Credit where credits due to Keir Starmer government, they got a deal, they did get relief out of this. And I think they’ve built themselves a protective shield,” said Oresman.
The Conservative government spent years labouring away at trying to finesse a comprehensive free trade agreement with the US: “there had actually been quite extensive negotiations, to the point where there were chapter texts of position papers for a free trade agreement between the UK and the US,” said George Riddell, managing director of trade advisory, Goyder Ltd.
Ultimately, it fell through.
In response to the finally-brokered deal, Conservative leader Kemi Badenoch said “we’ve been shafted.”
Some Conservatives were more measured.
Andrew Griffith, shadow trade secretary, and Liz Truss, previously Prime Minister and trade secretary, both welcomed the deal as a “Brexit benefit.”
“This is a maxed-out deal,” Trump said.
Riddell says it’s unlikely that the US will go back down the free trade route anytime soon, as “it’s been a very long time” since they last brokered a more comprehensive agreement.
Ben Ramanauskas, senior fellow in economics at Policy Exchange, said: “This deal, coupled with the recently announced trade agreement with India, shows the benefits of having an independent trade policy. The Government should be commended for making the most of this and build on it to strike a more comprehensive agreement with the US and other countries.”