Recent legal challenges to President Trump’s trade tariffs have raised questions about their impact on the UK-US trade agreement.
A New York court deemed the president’s broad “reciprocal” import taxes unlawful. However, an appeals court subsequently allowed their collection pending a June 5th hearing. This development has limited immediate consequences for the UK-US pact.
The contested tariffs exclude those on automobiles (a major UK export to the US), and steel and aluminum, which remain subject to 27.5% and 25% tariffs respectively, consistent with rates imposed on other nations.
While a UK-US deal aims to reduce car tariffs to 10% and eliminate those on steel and aluminum, this agreement is not yet in effect. Sources at Jaguar Land Rover highlighted the significant financial burden of these tariffs, contradicting industry claims that existing US inventories could mitigate the impact.
The government is actively working towards swift implementation, with Trade Secretary Jonathan Reynolds planning to advocate for expedited action during upcoming OECD meetings.
The ruling does prevent Trump from imposing a blanket 10% tariff on other UK goods (e.g., salmon, whisky), though the long-term implications for this aspect of the tariff deal remain unclear.
Any relief felt by British exporters may be short-lived, given the White House’s stated intent to appeal. Alternative avenues for tariff imposition exist, such as leveraging other trade act provisions or seeking congressional approval.
The UK’s trade deal with the US, initially met with fanfare, now faces uncertainty. Its effectiveness hinges on whether the President can ultimately impose significant tariffs, subject to potential legal or legislative constraints.
The ongoing legal battle adds significant unpredictability to international trade, hindering business planning and investment confidence.
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