The United States has agreed to reduce Trump-era tariffs on steel and aluminum imports to the United Kingdom, eliminating a point of contention between the allies.
The action comes after previous agreements with the European Union and Japan over the divisive tariffs imposed by former President Donald Trump in the name of national security in 2018.
In exchange, the UK would remove further tariffs on American goods such as whiskey and Levi’s denim.
The decision was well received by business organizations.
Under the terms of the deal, the United States will replace its 25% steel tariffs with a quota system.
The scheme would allow duty-free metal imports into the nation up to a set threshold – the quota – before levies are reintroduced.
The agreement will take effect on June 1st.
Anne-Marie Trevelyan, the International Trade Secretary, said the accord had eliminated a “very annoying nuisance,” calling it “excellent news for the steel and aluminum industries, which sustain over 80,000 employment throughout the UK.”
“It means our manufacturers may once again enter the US market with a high level of tariff-free access,” she added.
“Hopefully, we can now go on with our robust trading relationship with the United States.”
Former President Donald Trump made trade a defining area of concentration, using tariffs as negotiating chips in diplomacy. The Biden administration’s low priority for trade problems indicates a significant reversal from Trump’s approach.
When he imposed a 25% tax on foreign steel exports and a 15% tax on foreign aluminum, he sparked a firestorm of protest in the United States and overseas, emphasizing the need to protect America’s industrial base and dismissing fears that tariffs would raise costs.
After allies, like the United Kingdom, slapped tariffs on US items like Harley-Davidson motorbikes in response, Mr Trump backed off on the tariffs for certain nations, including Canada, instead opting for quotas.
Later, US Vice President Joe Biden struck similar agreements with the European Union and Japan.
The policy has received acclaim in the United States, notably from organizations such as the United Steel Workers, for addressing the concerns of allies while also protecting US industry.
Because many steel companies are located in critical election states, Mr. Biden has to keep employees’ support.
The union hailed the new agreement on Tuesday for provisions such as mandated yearly audits of British Steel, which has a Chinese parent company, that it claimed would help protect against unjustly subsidised steel production.
UK Steel, a business lobbying group, applauded the agreement, saying it will “be felt by steel firms and their people right throughout the UK and is very welcome.”
However, with the quotas in place, customers are unlikely to enjoy benefits such as decreased costs, according to Flexport economist Phil Levy.
“Replacing tariffs with a quota system really removes clarity from these issues and does not provide the benefits of free trade,” he added.
American spirits exporters applauded the agreement, which should lower the price of their bourbon whiskeys in the United Kingdom. “Distillers around the United States are celebrating the end of this lengthy tariff nightmare,” said Chris Swonger, president of the Distilled Spirits Council.
Last year, the US and the UK exchanged over $260 billion in products, the bulk of which were US exports such as metals, aviation components, oil, and gas.
Despite the fact that America contributes for roughly a fifth of total UK commerce, the UK market accounts for only 5% of US exports.
Mr Bown believes that the United States imports far too little British steel for an agreement to have a meaningful influence on prices. The impact on costs for UK consumers of American items is likewise expected to be minor, he added.
“It can’t injure the customer, therefore it will benefit them,” he added, “but by how much is uncertain.”