UK-US trade Deal Comes Into Effect

Source Credit : CNBC

The U.K.-U.S. trade deal comes into play on Monday, giving a preferential tariff rate to British cars imported to America, while questions linger over final levies on the U.K.’s metal exports.

Back in May, the U.K. became the first country to negotiate a trade deal with the U.S. since White House leader Donald Trump unveiled his so-called reciprocal tariffs a month prior. The terms of the agreement are effective as of June 30.

Under the deal, a blanket 10% tariff now applies to U.K. goods imported into the United States.

It will also see the first 100,000 vehicles sold from the U.K. to the U.S. every year subjected to a 10% tariff. Any further vehicles sent to the U.S. will receive a 25% import duty.

According to figures from influential autos trade body the Society of Motor Manufacturers and Traders (SMMT), around 102,000 cars manufactured in Britain were exported to the U.S. last year.

Mike Hawes, CEO of the SMMT said on Monday that the deal was “a huge relief for the U.K. automotive companies that export to this critically important market.”

“It immediately slashes the punitive tariffs that brought the US export market to a standstill and threatened the viability of some of the most famous names in British manufacturing,” he said in a statement.

The U.S. has a trade surplus on goods with Britain, meaning it exports more to the U.K. than it imports. Cars are the U.K.’s largest export to the United States, with the U.S. emerging as the top buyer of British cars globally. Last year, 27.4% of all U.K. car exports were shipped to America.

The 10-25% tariff range is sharply lower from the 50% levy slapped on vehicles imported to the U.S. from other trade partners.