Rush to book market spaces

Two trade deals were announced last week that involved the United Kingdom (UK). The first of these was with India and the second with the US.

- Amitendu Palit

Both deals signal heightened, but unsynchronised, trade policy activity set off by US tariffs, which have accelerated the rush to secure slices of foreign markets on preferential terms.

Neither of the two deals are out as legal texts and a lot of fine-tuning remain for both. The US-UK agreement is much smaller in intent and scope. It is limited to announcements on specific tariff cuts. The US has been able to shake tariffs off for beef and ethanol exports, while the UK has got favourable tariff treatment for automobiles, steel, and aluminium. It's interesting to see how the carrot and stick have been employed by the US in the deal: the baseline global reciprocal tariff of 10% announced by the US on April 2 will continue to apply for UK exports. However, steel and aluminium exports from the UK have been spared the additional generic tariffs imposed under Section 232 on economic security grounds. A similar partial exemption has been offered to automobile exports from the UK, which, while drawing 10% reciprocal tariffs, will nonetheless be spared another generic foreign vehicle tariff of 25%, for 100,000 cars each year. Thus, the US has used reciprocal and generic tariffs to offer selective market access—an approach it is no doubt going to employ in all ongoing negotiations.