UK Secures Unique Trade Deal with US Amid Rising Tariffs Offering Major Economic Advantages for British Exporters
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UK Secures Unique Trade Deal with US Amid Rising Tariffs Offering Major Economic Advantages for British Exporters
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The most significant headline today is the dramatic rise in US tariff rates under President Donald Trump. According to The Budget Lab at Yale, the overall average effective tariff rate in the US for 2025 is now 18.3 percent, which is eight times higher than last year and the highest rate seen since 1934. These tariffs are mainly targeted at a broad array of imported goods, with consumer products like clothing and shoes facing some of the steepest hikes. The report estimates that shoe prices are 40 percent higher in the US, and apparel is up 38 percent in the short run, with longer-term prices expected to remain almost 20 percent above previous levels. For US consumers, that's an average household income loss equivalent to $2,400 for 2025, and the resulting combination of rising prices and slowing growth is fueling fears of stagflation—when both inflation and unemployment rise together.
But what does this mean for the United Kingdom and its economic relationship with America? According to the Ditchley Foundation Annual Lecture delivered just yesterday, Britain has leveraged its post-Brexit regulatory freedom to deepen American investment and, crucially, has become the first country to negotiate a new trade deal directly with President Trump. This agreement reportedly covers the majority of the UK's high-value industrial and goods exports to the US and has secured the lowest US tariff rate so far for British products. This achievement reflects both countries’ long-standing ambition for closer trade ties, and experts are highlighting its political and economic value for the UK at a time when competition for American capital is fierce.
As a result of these exemptions and negotiated rates, The Times of India notes that the UK is among a select group of US trade partners granted tariff relief—with zero US duties on aligned British industrial goods beginning earlier this week. For British exporters, this presents a major advantage: while other US allies such as Canada are facing tariffs on up to 35 percent of their exports and accused of inaction on border issues, the UK’s swift trade diplomacy has spared it from the harshest measures of the current US tariff regime.
Meanwhile, public sentiment in the UK reflects ongoing concerns over tariffs and US policy. Kantar’s July survey found that—unlike in Canada, where consumer boycotts of US goods and travel have surged—British citizens have been comparatively less motivated to boycott American products. Interestingly, the survey showed that in the UK, those on the political right are more likely to participate in such boycotts than those on the left, a reversal of earlier patterns.
For listeners tracking the pulse of UK–US economic relations: the current moment is defined by sweeping US trade protectionism, a standout British trade deal, and new opportunities and risks for British businesses and households. The situation remains dynamic, with further developments possible as both countries continue to negotiate their complex economic partnership.
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