This latest twist in the Trump trade tariff drama has many people asking what it means for the UK’s deal with the US.
A New York court ruled the blanket “reciprocal” import taxes imposed by the US president were illegal, but a day later an appeals court said they could continue to be collected ahead of the case being argued, with the next hearing on 5 June.
Regardless of what the outcome of the case is, the impact on the UK-US tariff pact is actually not as much as you might think.
For a start, the tariffs that the US court has ruled illegal do not include those on cars, which make up the bulk of what the UK exports to the US, and steel and aluminium, which are the other UK industries most affected.
UK exports of cars are currently attracting 27.5% tariffs while steel and aluminium are hit with 25% tariffs – the same as every other country. Wednesday’s ruling has not changed that.
And although the UK has done a deal with the US to reduce car tariffs to 10% and steel and aluminium tariffs to zero, that deal is yet to come into force.
Sources at Jaguar Land Rover told the BBC that these tariffs were costing them “a huge amount of money” and pushed back on the notion floated by the car industry trade body, the SMMT, that they could run down current US inventories before feeling the pain of the tariffs.
The government said it was working to implement the deal as quickly as possible and that Trade Secretary Jonathan Reynolds would press the case for speedy implementation when he meets US representatives at a meeting of the Organisation for Economic Co-operation and Development think-tank in Paris next week.
The ruling does block Trump’s imposition of blanket tariffs of 10% on other UK goods entering the US – such as products like salmon and whisky. So how that part of the tariff deal will pan out remains uncertain.
British exporters’ sigh of relief at tariffs being stopped could be short-lived as the White House has said it intends to appeal the decision.
There are also other mechanisms for the President to impose tariffs – through different provisions in trade acts or pushing them through congress.
The UK announced its trade deal with the US to some fanfare, but there are question marks as to how much better off the UK will be than other countries if it turns out that the President is prevented from imposing swingeing tariffs on others by either the courts or his own legislature.
Perhaps the most corrosive effect of all is yet another wild card being thrown into an already unpredictable game of international trade stand-off.
It makes it hard for businesses to plan, to invest, with any confidence.
