Reference News Network reported on May 10th that Agence France-Presse reported on May 8th that US President Trump announced a "historic" compromise with London on May 8th, marking the first truce in America's global trade offensive.

Trump said he was "very pleased" to announce this "historic" agreement.

UK Prime Minister Keir Starmer participated in the press conference held in the Oval Office of the White House via telephone, and he also praised it as a "historic day".

According to a report by Spain's El Mundo on May 8th, under pressure, Trump needed to come up with a trade agreement that could calm both the market and public opinion, as people were concerned that his tariff chaos would lead to rising inflation and the economic recession they feared, which the Biden administration successfully avoided after the pandemic.

In all the major governments that can quickly reach an agreement and show results, UK Prime Minister Keir Starmer became the most willing one to play the role assigned by Trump.

This made the UK become the top ally of the United States and benefited from tariff reductions, allowing Trump to achieve his first major trade victory. According to the agreement, the car tariff for the British market will be reduced "immediately", the rate applicable to most situations will drop from 27.5% to 10%, as the minimum rate announced by Trump on April 2nd will still remain. The discounted tariff applies to the first 100,000 cars exported by the UK to the United States. Given that last year the UK exported 101,000 cars to the US, this quota almost covers all exports.

The US also canceled the 25% steel and aluminum tariffs. In return, the UK canceled the 7 billion dollar ethanol product tariff on American exports and accepted the "equivalent" market access conditions for beef, sacrificing health equivalence standards and traceability regulations aimed at curbing infectious diseases.

Besides the economic terms (which did not excite Wall Street analysts), the agreement also has strong geopolitical strategic implications. Trump announced that the UK will be included in the new "economic security alliance" with the US, a framework covering export controls, industrial reinforcement, and protection of key sectors such as steel and defense. He said, "Both countries understand that economic security is national security."

According to another report by The Wall Street Journal website on May 8th, after reaching an agreement with the UK, the US stated that a 10% tariff on the world is the new baseline.

If there is any country that deserves to reach a favorable trade agreement with the US, it is the UK. The UK actually has a trade deficit with the US, purchasing large amounts of American-made goods, investing heavily in defense, and having a leader admired by President Trump.

However, the agreement announced on May 8th is not beneficial to the UK but rather a bad deal. Now, the lowest tariff for UK exports to the US will rise from less than 2% in 2023 to 10%, except for some items like steel and jet engines. Tariffs of 25% will apply to car exports exceeding 100,000 vehicles. In return, the UK will relax import restrictions on American beef and other products.

If told a year ago that the US would impose a 10% tariff on its oldest and staunchest ally, you might think there was a serious problem between the two countries. But now, both nations praise it as a good result—the stock market seems to react similarly—indicating how much things have changed.

The US is now a high-tariff and protectionist country. The evaluation of trade agreements is not about how much trade barriers are reduced but how much they increase. Only when the situation in other countries may be worse does the UK have the right to claim victory.

Sara Bianki, an analyst at Evercore ISI, wrote in a report sent to clients on May 8th while serving as a trade negotiator during President Biden's term: "The 10% baseline will remain—the if the UK cannot reduce it to zero, no other country is likely to do so."

Original article: https://www.toutiao.com/article/7502721326692516392/

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