Today's Edition
Rashed Hasan AlHosani *
A series of US tariff hikes on the country's largest trading partners had already entered into effect, but their implementation was postponed following widespread international criticism.
In response, global stakeholders either prepared comprehensive countermeasures or moved to engage Washington in talks aimed at mitigating the fallout. These developments opened the door to trade negotiations with allies, with the goal of addressing the trade imbalance with the United States.
Indeed, President Donald Trump reached a trade agreement with the United Kingdom that reduces non-tariff barriers, speeds up customs procedures for US exports, and mitigates the overall burden of tariffs. The agreement eliminates bureaucratic delays on both sides and marks the first trade deal of Trump's second administration following a wave of tariff increases on US trading partners. Several other trade agreements, including one with the European Union, are reportedly in advanced stages of negotiation.
The US-UK trade deal will open up British markets to American chemical and machinery products, with plans to make the UK economically aligned with the US. The US is expected to generate $6 billion in external revenue from a 10% tariff, in addition to creating $5 billion in new export opportunities. Negotiations are still underway to cover additional sectors, including pharmaceuticals and the remaining reciprocal tariffs.
The agreement includes the establishment of a trade zone for aluminium and steel, as well as a secure supply chain for pharmaceuticals. Further changes to the deal are likely to be made to boost trade and create jobs on both sides.
US tariffs on cars have been lowered, and duties on steel and aluminium have been eliminated. British agricultural products will now have access to the US market, with British farmers granted a tariff-free quota of 13,000 metric tons.
This move may signal a broader US strategy of pursuing bilateral trade and tariff agreements, even with China. It reflects the Trump administration's trade model, which aims to finalise up to 90 bilateral deals during the current 90-day suspension of tariffs. While the target is ambitious, it highlights the administration's approach following the wave of tariff hikes and raises the possibility of extending the suspension period.
The UK is not the only country seeking trade deals with the American administration. Australia, the European Union, and several Asian countries are also actively pursuing agreements, especially Asian economies looking to gain a foothold in the US market as Chinese exports in some sectors face potential decline.
In turn, the Trump administration needs to pursue a customised approach, negotiating country-by-country trade deals based on shared interests and specific economic conditions. However, these partnerships can only succeed if Washington is willing to engage in detailed negotiations and place genuine trust in partners.
For President Trump to achieve his trade goals, tariffs alone will not suffice. What is required is a comprehensive partnership that includes America's allies across the world.
Despite the challenges, China is still negotiating with the United States to reduce tariffs – the highest in the world on China. The trade war may cool down, especially as China's industrial output slows and exporters struggle with growing inventories and the need to find new markets.
In the end, agreement is better than escalation. On the US side, the tariff hikes have triggered the first economic contraction in three years, hitting American consumers and raising concerns about inflation and recession. Reaching a mutual understanding is beneficial for both sides.
From the beginning, the US administration aimed to reshape global trade dynamics. But instead of building consensus with trade partners, it started by imposing tariffs as a first move, followed by bilateral deals to fix trade imbalances and protect domestic industries.
If this American strategy succeeds, it could usher in a smoother and more streamlined global trade system that is less troubled by waves of tariff hikes on dozens of countries around the world.
* The writer is a researcher at TRENDS Research & Advisory
