- Friday, June 20, 2025
Trump clinches a UK trade deal post-G7, while tensions rise with the EU and Japan over tariff demands. As a July 9 tariff pause nears its end, markets await clarity on Trump’s next protectionist move.
By: Vibhuti Pathak
President Donald Trump has finalized a significant trade agreement with the United Kingdom, even as negotiations with the European Union and Japan remain contentious. The deal, announced at the G7 summit, marks a pivotal moment in US trade policy as the administration pushes for reciprocal tariffs and market access with key global partners.
US-UK Trade Deal Finalized: Key Provisions and Impact
Trump and British Prime Minister Keir Starmer confirmed the completion of the US-UK Economic Prosperity Deal, which provides unprecedented access for American companies to British markets and vice versa.
The agreement includes billions of dollars in increased market access for US exports, especially in agriculture, and reduces or eliminates non-tariff barriers that previously disadvantaged American products.
For automobiles, the deal sets a 10 per cent tariff on the first 100,000 UK vehicles imported into the US annually, with any additional cars facing a 25 per cent tariff. UK automotive parts for use in UK vehicles will also be subject to a 10 per cent tariff.
In the aerospace sector, certain UK products will no longer be subject to tariffs, strengthening supply chains for both countries. For steel and aluminum, the US will establish tariff-rate quotas for UK imports, with products outside those quotas remaining subject to existing Section 232 tariffs.
Prime Minister Starmer called the agreement “a very significant day” for both nations, emphasizing its benefits for jobs and market access. Trump praised the partnership as “just fantastic,” stating, “We signed it and it’s done”.
EU and Japan Push for Similar Trade Arrangements
Following the US-UK deal, the European Union is seeking a comparable agreement, with sources indicating that a 10 per cent “reciprocal” tariff is likely to be the starting point for US-EU negotiations.
The EU is also pushing for a UK-style deal that would allow some tariffs to remain after the July 9 deadline, as Trump’s administration has warned of imposing unilateral tariff rates if no agreement is reached.
Japan, meanwhile, is described by Trump as “tough” in ongoing trade talks. He said Japan would soon receive a letter threatening unilateral tariffs if a deal is not finalized, echoing his approach with other trading partners.
Tariff Strategy and Economic Uncertainty
The Trump administration’s aggressive tariff strategy, including the imposition of a 10 per cent baseline tariff on many imports, has unsettled global markets. The Federal Reserve, which held interest rates steady this week, is closely monitoring the impact of tariffs on consumer prices.
Fed Chair Jerome Powell noted, “We’re beginning to see some effects, and we do expect to see more of them over the coming months,” but cautioned that the full pass-through to inflation remains uncertain.
Legal and Political Repercussions
Trump’s tariffs are facing legal challenges, with two family-owned businesses recently filing a case with the Supreme Court to contest the administration’s sweeping duties. The outcome could set a precedent for future trade policy and executive authority.
With the US-UK trade deal now in effect and the July 9 deadline for other agreements looming, the Trump administration’s push for reciprocal tariffs and market access is reshaping the global trade landscape.
As the EU and Japan seek similar terms, the world watches to see how these high-stakes negotiations will affect international commerce and economic stability
