LIVE MARKETS-US-UK trade deal not game changer - Oxford Economics

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US-UK TRADE DEAL NOT GAME CHANGER - OXFORD ECONOMICS

On Thursday, U.S. President Donald Trump and British Prime Minister Keir Starmer announced a trade deal, hailed by the former as "tremendous" and by the latter as "historic."

Just how tremendously historic or historically tremendous this deal actually is, has been parsed by a note from Oxford Economics (HOE).

Right off the bat, this deal - which leaves intact a 10% tariff against imports from the UK - is neither historic nor tremendous enough to prompt OE to revise its forecast for a sharp slowdown of U.S. economic growth in the second half of the year.

"The devil is always in the details," writes Michael Pearce, OE's deputy chief U.S. economist. "And the lack of specifics suggests those headline figures could be spread over many years, and will include some purchases that would have been made anyway."

The most significant concession made by the U.S. was to allow 100,000 vehicles to be imported from Great Britain at a 10% tariff as opposed to 25%. But Pearce points out that's no big sacrifice; the UK exported 92,000 vehicles to the U.S. in 2024, luxury brands that don't compete with American-made cars.

A tariff and quota system covering steel and aluminum was announced and a detail-light nod in the direction of "working jointly on pharmaceuticals."

The UK committed to open markets for agriculture, chemicals and machinery, and a UK airline will unveil plans for a $10 billion aircraft purchase from Boeing BA.N, with "no indication of a time horizon, of whether this was a purchase that would have been made otherwise," Pearce adds.

Among this "tremendous" deal's "historic" take-aways, Pearce says, is what it didn't cover.

"Tellingly, the deal did not touch on more contentious issues, such as opening healthcare markets to U.S. providers or the UK's digital services tax," Pearce writes. "Other countries will be unwilling to offer significant politically difficult concessions in return for minor tariff relief."

(Stephen Culp)

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