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Donald Trump’s legal defeat over his global tariff policy could hit attempts by Britain to get the US president to deliver promised tariff cuts on UK car and steel exports, trade experts have warned.
Although Trump’s defeat at the US Court of International Trade does not have a direct bearing on sectoral tariffs on cars and steel, experts fear it will sow more “chaos and confusion” around his trade policy.
Trump and Sir Keir Starmer, UK prime minister, earlier this month committed to cut tariffs, including on British car and steel exports to America — but none of those tariff cuts have actually taken effect.
Now trade experts fear that Trump will be distracted by his domestic legal battle, notably over the future of his 10 per cent baseline global tariff, and put his offer to cut tariffs on British products on the backburner.
David Henig of the European Centre for International Political Economy, a think-tank, said: “Everything is pretty chaotic. Lots of things need sign-off from the top. This will cause more chaos, more confusion.”
The uncertainty over the delivery of US tariff cuts on British exports, seen as vital to the British car and steel sectors, stems in part from the fact that the so-called “US-UK Economic Prosperity Deal” has no legal underpinning.
“Both the United States and the United Kingdom recognise that this document does not constitute a legally binding agreement,” the document agreed by Trump and Starmer on May 8 says.
Trump agreed to cut a 27.5 per cent tariff on cars to 10 per cent for the first 100,000 vehicles shipped from the UK. Both sides are negotiating on when this might take effect.
Starmer also said at the time that the US had agreed to lower tariffs on UK steel and aluminium exports to zero, but they are currently set at 25 per cent. In return for cuts to Trump’s tariffs, the UK granted the US greater market access for beef, ethanol and industrial products.
Jonathan Reynolds, UK business secretary, is hoping to hold talks next week with US trade representative Jamieson Greer at an OECD conference in Paris to discuss “timelines” for delivering the promised tariff cuts.
A spokesman for Reynolds said on Thursday the talks were still expected to go ahead and that the US court ruling was “a matter for the US to determine domestically”.
A British government spokesperson said: “The UK was the first country to secure a deal with the US in a move that will protect British business and jobs across key sectors, from autos to steel.
“We are working to ensure that businesses can benefit from the deal as quickly as possible and will confirm next steps in due course.”
A White House spokesperson said: “The Trump administration is working closely with our British counterparts to fully implement the terms of this landmark agreement in short order and expand bilateral trade between our nations.”
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The US court ruling found that Trump’s “liberation day” tariff scheme was illegal, including a baseline 10 per cent tariff and higher so-called reciprocal duties on some countries.
Sam Lowe, trade lead at consultancy Flint Global, said: “The risk from the UK side is that the Trump administration will be focused on fighting domestically and that could delay implementation of the deal.”
Lowe said that an associated risk was that if the court ruling stands and the 10 per cent baseline tariff “falls away”, that could have a knock-on effect on US calculations about trade deals covering sectoral tariffs.
Since the pact was agreed, British car industry executives have been seeking clarity on whether the 10 per cent tariff rate can be applied retrospectively from when it was announced.
Jaguar Land Rover had paused shipments to the US in April in response to Trump’s tariffs, but resumed exports earlier this month at the 27.5 per cent rate.
Aston Martin had also been limiting exports of its cars to the US from April, but the company is hoping the tariff uncertainty will be resolved when it resumes shipments in early June, according to people close to the company.
Key stumbling blocks to implementing the zero tariff plan for UK steelmakers include the size of anticipated export quotas to the US. UK Steel, the trade body, said it needed implementation of the trade pact “as soon as possible”.
Additional reporting by Sylvia Pfeifer and Gill Plimmer in London
