Trump's trade triumph with UK: A framework, not a full deal

President Trump unveiled a framework trade agreement with the United Kingdom on Thursday, describing it as a milestone in his mission to revitalise the global economy. The announcement ceremony was meticulously orchestrated, featuring the participation of British Prime Minister Keir Starmer, who connected with the White House via phone during the event organised on the 80th anniversary of the Allies' victory in World War II.

However, contrary to earlier announcements, the agreement is neither the "full and comprehensive" deal that Trump promised nor the free trade agreement he sought during his first term, claims Bloomberg. The framework provides the United States with increased market access and a faster customs process for exports to the United Kingdom, while the UK gains limited tariff relief on cars, steel, and aluminium.

"From the point of view of markets generally, as well as those who are concerned about the US economy, this is a nothingburger," stated Tim Meyer, a professor of international trade law at Duke University School of Law.

He added, "There’s nothing really to see here. Obviously this is a framework, this is not actually an agreement."

Prime Minister Starmer admitted that both sides need to "finish ironing out some of the details," yet called the agreement "fantastic." Trump, on the other hand, downplayed questions about whether he overstated the agreement, presenting it as a "great deal for both parties" and adding that "every country wants to be making deals."

The agreement overlooks some of the biggest concerns of American companies regarding trade relations. The United Kingdom will maintain its digital services tax, which impacts major American tech companies, with only a vague promise to work on a future digital trade agreement. Christine Bliss, president of the Coalition of Services Industries, stated, "The UK’s digital services tax should be further discussed and addressed to ensure it is implemented in a manner that treats American service suppliers fairly."

Both sides also left unresolved the issue of Trump's plans to introduce broad tariffs on pharmaceutical products. Although the UK removed tariffs on some American agricultural products, strict food standards regulations remain in place.

"So far, we’ve seen little signs of euphoria in UK financial markets, which tells you all you need to know about how investors are viewing the deal," said Matthew Ryan, head of market strategy at Ebury. "This is also far from a full-blown trade agreement, which will likely take months, if not years, to be finalised, and it will still be some time before the finer details are ironed out."

The United States and the United Kingdom also presented conflicting information about the key elements of the agreement. The British government issued a statement that US tariffs on steel and aluminium from the UK would be lifted, while the White House published its own description less than an hour later, stating that the parties "will negotiate an alternative solution" to the tariffs on metals.

Despite these uncertainties, investors reacted positively, with almost all major segments of the stock market showing gains. Trump maintained a 10 percent basic tariff rate for the United Kingdom - the same as he applied in his initial announcement on 2nd April, which serves as a warning to countries hoping to lower this number.

The White House stated that this action "sets the tone for other trading partners to promote reciprocal trade with the United States." Trump, discussing the terms, emphasised that "we are using tariffs now for our benefit" and made it clear that for some countries, they may be higher than 10 percent. "They made a good deal," he said about the British. "Many, some, will be much higher."