[Text/Observer Network Wang Yi] Local time on May 6, US Treasury Secretary Scott Beasant said at a congressional hearing that several countries have made "good offers," and some trade agreements "may be announced as early as this week." British media revealed that the UK is among them.

The Financial Times reported on May 7, citing anonymous British and American officials, that the two countries are about to sign a trade agreement this week. The proposed agreement includes the US granting tariff quotas to some British automotive and steel products, with the tariff rate for these products being lower than 25%.

Trump previously announced in February and March the imposition of a 25% tariff on imported steel and aluminum, as well as automobiles. This week, British trade representatives will head to Washington to negotiate, hoping to persuade the US side to reduce tariffs on these two industries.

It is reported that in exchange for concessions from the US, the UK plans to cancel the digital service tax levied on multinational tech companies, reduce tariffs on US cars and agricultural products. Bloomberg noted that the UK imposes a 2% digital service tax on users of foreign search engines, social media platforms, and e-commerce platforms, which is a key point in the negotiations. Google's parent company Alphabet, Meta, Amazon, and other US companies have been dissatisfied with the digital service tax. The UK government hopes to reduce or eliminate the tax to exchange for reduced or even exempted US tariffs.

The Financial Times stated that if the UK-US agreement is successfully signed, it will be one of the 17 agreements planned to be signed by the Trump administration, and another major trade agreement after the comprehensive free trade agreement signed between the UK and India on June 6.

However, it still cannot be definitively said that the agreement will be signed soon. Informants told Bloomberg that people are optimistic about reaching an agreement, but it is too early to judge whether an agreement can be reached this week. A senior British official also stated that they would not be forced to sign an agreement that does not serve the UK's interests just because the Trump administration is eager to announce the agreement to mitigate the impact of its tariffs.

British steel factory, Bloomberg

In February this year, the UK's automotive and steel industries both issued warnings that Trump's tariffs would have a "devastating impact" on their industries.

Mike Hawes, CEO of the Society of Motor Manufacturers and Traders (SMMT), said that the new US tariffs would have a "serious, significant, and direct" impact on the high-end products of the automotive industry. According to data from the association, the US is the second largest export market for UK automakers after the EU, with 100,000 vehicles exported to the US last year, worth over 7.5 billion pounds (approximately 72.4 billion yuan RMB).

A senior executive in the automotive industry told the Financial Times that he welcomes the potential tariff quota, but emphasized that the key goal remains reducing the 25% tariff rate. He added that quota operations are complex and inherently restrictive to trade. The most important thing is to cut the 25% tariff, as more than 10% would have a negative impact on the industry.

The Financial Times reported that since Trump imposed tariffs on steel in 2017, UK steel exports to the US have nearly halved. During the Biden administration, the UK was granted an annual quota of 500,000 tons of steel exempt from tariffs to the US, but this year Trump tore up the agreement and reimposed a 25% tariff on all steel and aluminum imported into the US.

The British Steel Association warned that Trump's tariffs would suppress the export of the UK steel industry. Data shows that the US market accounts for 10% of UK steel exports, and the expected loss to the UK due to US steel and aluminum tariffs is tens of millions of pounds annually.

In addition to the specific tariffs levied on steel, automobiles, and other commodities, the UK also faces Trump's "minimum baseline tariff" of 10% announced on April 2, which applies to all countries.

Bloomberg analyzed that under the influence of Trump's tariff policy, the UK is seeking to deepen economic ties with other countries. The new trade agreement announced with India on May 6 is the largest trade agreement signed by the UK since Brexit, but reaching an agreement with Trump remains the top priority for UK Prime Minister Keir Starmer.

The US is the UK's largest export market. According to official UK statistics, total goods exports to the US in 2024 amounted to approximately 58.7 billion pounds, accounting for more than 16% of the UK's total goods exports. It covers multiple high-value-added industries such as automobiles, whisky, pharmaceuticals, and chemicals. The US is also the UK's main supplier of fuel, but it has long hoped to open up more markets.

Two British officials familiar with the UK-US negotiations conveyed contradictory signals to the Financial Times. One said that the UK is seeking to avoid the worst impacts of future tariffs, describing the quota offered by the US as "very generous"; another described the agreement with the US as "limited".

Some British officials also told the paper that there are still differences between the two sides on issues such as pharmaceuticals and food production standards. The report stated that the UK government said it will not accept US food production standards, such as "chlorinated chicken" and "hormone beef," because accepting these would prevent the UK from reaching veterinary agreements with the EU, which is a key part of the UK's efforts to "reset" relations with the EU.

Bloomberg reported that the UK is also concerned that the US may impose tariffs on the pharmaceutical industry, threatening the country's developing life sciences sector. Trump's recent threat to impose movie tariffs also alarmed the UK, as it would harm the country's film industry.

Nevertheless, the UK seems to ultimately choose to sign an agreement with the US. The Financial Times analyzed trade data between the UK and the US on June 6 and found that the UK lacks the economic influence of a major trading nation and finds it difficult to retaliate against Trump's tariffs without harming its own economy. The paper noted that Starmer's statement about considering retaliatory tariffs to reach an agreement with the US appears more like "gritting teeth" under political pressure. Reaching an agreement with the US is very important for the UK.

This article is an exclusive contribution from the Observer Network and cannot be reprinted without permission.

Original source: https://www.toutiao.com/article/7501608254036935209/

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