Trump tariff war, UK ‘expands agriculture’, standardizes Japan and Korea, China ‘trade war ceasefire’
Trump’s tariff war has been standardized with the UK and the conclusion of a limited bilateral agreement on ‘10% tariffs and agricultural expansion’, and it has been revealed that it can be applied to Japan and Korea, and private negotiations are underway in Switzerland with the goal of a ‘trade war truce’ with China.
On the 8th, US President Trump and British Prime Minister Keir Starmer announced an agreement to maintain the 10% tariff on UK exports proposed by President Trump, and to a ‘limited bilateral trade agreement’ that would gradually expand agricultural accessibility for both countries and lower the US ban on UK car exports.
George Glass, the former US ambassador to Portugal and US Ambassador to Japan, said in an interview with Yomiuri on the 9th that the US-UK agreement “will serve as a standard for future negotiations with other countries,” and that there is a “clear possibility” that the US will set a low tariff quota on Japanese cars.
Britain signed a free trade agreement with the United States on the 6th, the day before the agreement, to increase trade in whiskey, cars, and food between the two sides.
Britain signed a free trade agreement with India that had been in the works for three years ahead of the agreement with the United States.
Britain appears to have established an agricultural free trade system with India in response to the Trump administration's strategy of expanding agricultural beef.
Reuters reported that “the agreement between the world’s fifth and sixth largest economies was reached after three years of stop-and-start negotiations and aims to increase bilateral trade by 25.5 billion pounds ($34 billion) by 2040,” adding that “Trump’s tariffs have led countries around the world to redouble their efforts to find new trading partners, and people familiar with the UK-India talks said the confusion has sharpened the focus on reaching a deal.”
Ambassador Glass said that the US will "negotiate after hearing Japan's thoughts on (low tariff quotas)" regarding the US setting a low tariff quota for imported British passenger cars, and expressed a positive view on applying a low tariff quota to Japanese automobiles through future discussions.
He judged it as a "standardization of the US-UK agreement," and Yomiuri stated that Trump had previously announced that "additional tariffs on automobiles, steel, and aluminum" would be excluded from negotiations in principle in tariff negotiations with Japan, but Ambassador Glass diagnosed that "negotiations are being conducted flexibly," citing the US-UK agreement that lowered both tariffs.
Yomiuri also saw that in tariff negotiations between Korea and the US, following the UK-US standardization, they are preparing to hold similar negotiations with Japan and apply this to Korea.
In April, President Trump imposed a reciprocal tariff of up to 50% on products from 57 trading partners, including the European Union (EU), but suspended the tariffs for "90 days" a few days later to buy time for negotiations until July 9. He then imposed a 25% tariff on auto imports, scrapped all tariff exemptions for steel and aluminum, announced new tariff investigations into pharmaceuticals, copper, timber and semiconductors, and added film to the tariff list in May.
Reuters said, “The U.S. tariff on British car imports to the U.S. will be cut from 27.5% to 10%, and the lower rate will apply to a quota of nearly 100,000 British vehicles exported to the U.S. last year.” “The U.S. tariff on imports to Britain’s struggling steel industry will fall from 25% to zero, while Britain’s 19% tariff on U.S. ethanol will be cut to zero through a quota of 1.4 billion litres (370 million gallons) that far exceeds the U.S. exports to Britain last year.
The two sides agreed a new reciprocal market access deal for beef, giving British farmers a duty-free quota of 13,000 metric tonnes for the first time.” U.S. Agriculture Secretary Brooke Rollins said the deal would “expand U.S. beef exports to Britain”.
Reuters said it would depend on whether U.S. beef could compete on price with British beef and appeal to British consumers, noting that “100% of the fresh beef sold by Britain’s two biggest supermarket chains, Tesco and Sainsbury’s, comes from the U.K. and Ireland.”
The U.K.-India free trade deal is changing the trade landscape in South Asia, opening up long-protected markets, including autos, and setting an early precedent for how the U.S. and the European Union will approach trade with the South Asian country.
Reuters said, “The India-UK FTA is the UK’s most important trade agreement since leaving the EU in 2020, but the expected increase in UK economic output due to the agreement is 4.8 billion pounds per year by 2040, which is small compared to the UK’s GDP of 2.6 trillion pounds in 2024.” It also said, “India’s Ministry of Trade said that 99% of India’s exports, including textiles, will benefit from the agreement without tariffs, and the UK will see 90% of its tariff lines reduced.” It diagnosed that South Asian countries, centered around India, will expand their international markets with textiles and seafood tariff-free.
The trade war between the US and China, which has clashed over East Asia, is being conducted as a ‘trade war ceasefire negotiation’ with China sending its chief security officer to the Swiss negotiating team. Reuters diagnosed that “Washington wants to reduce its trade deficit with China and persuade China to abandon what the U.S. calls its mercantilist economic model and contribute more to global consumption, which would mean painful domestic reforms for China,” and “China aims to ‘block external interference’ in its own development path in order to avoid the middle-income trap,” diagnosing that the strategic gap between the two countries is large.
China is specifically demanding that the U.S. “eliminate tariffs” in its demand for a “list of items that China will import from the U.S.,” and through this, it is aiming for “equal treatment of the U.S. and China on the world stage.”
Regarding the Swiss meeting, Reuters diagnosed that “the two sides are much further apart than during the first trade war during President Trump’s previous term, and the risk of a major backlash seems greater,” and “for now, the market is at least relieved that the world’s major powers have a chance to get away from the path of escalating threats that investors fear could spill over from trade to finance and other sectors,” diagnosing that the negotiations for a “temporary trade war truce” between the two sides.
The talks between U.S. Treasury Secretary Scott Besent and chief trade negotiator Jamison Greer in Switzerland with Chinese Premier Heli Feng are heavily interwoven with non-tariff issues, and China has sent its top public security official to the Swiss talks.
“If there is a temporary ceasefire or a symmetrical tariff rollback, that would be helpful for a potential full-scale negotiation effort in the future,” Bo Zhengyuan, CEO of Shanghai-based consultancy Plenum, told Reuters.
“I expect China will insist on the same 90-day tariff exemption that everyone else has received in order to create favorable conditions for negotiations,” Ryan Haas, director of the Brookings Institution’s China Center, told Reuters. “There is little chance of a breakthrough. Since the U.S. decision to raise tariffs was arbitrary, the decision to ease them could be equally arbitrary,” Haas said.
Eswar Prasad, former director of the International Monetary Fund’s China division, said that while both the U.S. and China have a strong economic and financial interest in easing trade hostilities, lasting détente is unlikely. “Nevertheless, the fact that the two sides are at least beginning high-level negotiations represents a significant step forward, and offers hope that the two sides will tone down their rhetoric and withdraw any further overt hostility on trade and other aspects of their economic relationship,” he told the New York Times on the 9th.
The New York Times reported that during the Swiss meeting, “President Trump reiterated that he had proposed lowering China’s tariffs to 80%, and said, ‘We will see how that plays out.’” “The 80% tariff is a significant reduction from the current 145%, but it would most likely still block most trade between the two countries.”
The Times continued, "The Chinese government has not confirmed who else will attend the meeting, including Vice Premier He Rongping, or whether Wang Xiaohong, the Minister of Public Security who leads the Narcotics Control Commission, will attend." Wang's attendance would signal that the two sides are open to discussing President Trump's concerns about China's role in helping fentanyl flow into the United States.