Trade experts and industrial groups have warned that the US-UK trade agreement leaves behind many unanswered questions that need to be resolved through further negotiations.
The deal covers five-page text that provides only a summary of the contract, which was compiled in just six weeks following President Donald Trump’s “Liberation Day” tariff announcement on April 2.
The document, released Thursday, said it “does not constitute a legally binding agreement,” pointing out that both parties must begin “developing and formalizing” the proposal.
Beef and Bioethanol
The White House claimed that the deal presented a “$5 billion opportunity” for American farmers to export to the UK, but details were included in only two regions. With a mutual beef quota of 13,000 tons without tariffs, the UK has pledged to remove the existing 19% collection of 140 million litres of US ethanol.
Both sides said they would “collaborate” to improve market access for other agricultural products, but did not specify which time frame or which time frame. The White House noted that the UK is maintaining “unfair” tariffs on more than 125% of meat, poultry and dairy products from the US.
The UK’s agriculture and biofuel sector said it is still trying to see if a tariff-free quota applies to all ethanol, including only ethanol used in fuel use or for food and drink production.
The National Farmers Union warned that if quotas were applied to fuel, arable farmers who sold wheat to biofuel producers could lose their profitable income streams. Up to 15% of the UK’s domestic demand for wheat comes from biofuels, the NFU added.
The UK has two biofuel plants, Ensus, Teesside and Vivergo, located in East Yorkshire. East Yorkshire is owned by UK foods associated with UK retailers, sugar and food conglomerates. Ensus said the deal raised a “very important question” about the viability of bioethanol production in the UK and awaits details from the government.
The Agricultural Industry Federation, which represents the UK’s feed sector, said the removal of the 19% UK tariff on US ethernol “needs more clarity.”
“The government needs to consider how it can ensure that the sector remains competitive,” said Edward Barker, AIC’s policy director.
Setting standards
Trade experts also said the agreement raised the question of whether the UK would recognize the US industrial standard setting body as an international standard organ.
Currently, the UK is also part of a 34-country European regional group that reflects an international standard production system based on the definition of a global trade organization, but the US system is more commercially driven.
According to Scott Steedman, Director of Standards for the UK Standards Agency, international regulations cover a vast range of products, services and how they implement a business.
He said the US demands risk “muddy waters” about the UK’s commitment to standard international governance structures.
Peter Holmes, a fellow at the UK Trade Policy Observatory at the University of Sussex, did not promise the UK to lower the standard, but added that the UK took a different risk from its current position in Europe, making the imminent EU-UK even more difficult.
“The UK must be very careful about actually negotiating agreements that could undermine consumer protection.
Pharmaceuticals
Drug industry observers say the US-UK transaction has made many important issues unclear, including proposed tariff rates, supply chain security and intellectual property regulations, and UK policy for the sector.
The agreement promises to provide UK “significantly preferential” treatment if Washington imposes tariffs on drugs. This is the subject of the so-called Section 232 investigation, and is about whether tariffs should be applied as a national security issue.
The probe, which will be finished by the end of the year, is based in the context of growing US concerns about its dependence on China on critical products. China is a major global source of active pharmaceutical ingredients (APIs), an important ingredient in medicine.
Another uncertainty relates to the UK pledge that “we will strive to improve the overall environment of pharmaceutical companies operating in the UK.”
The industry is already discussing with the UK government about the prices that the National Health Service has paid for drugs.
Richard Torbett, chief executive of the UK Association of Pharmaceutical Industry Lobby Groups, said the tariffs imposed will make it difficult for patients in both countries to maintain resilience in the supply chain and to provide access to the drugs and vaccines they need.
“This initial transaction is just the first step in pharmaceutical products, but we are confident that it will continue to be possible to achieve positive results and is based on the interests of both countries,” he added.
Steel and aluminum
Steel and aluminum manufacturers were struggling to understand the impact on their businesses after failing to explicitly confirm the “zero tariff” contract announced by British Prime Minister Kier on Thursday.
UK Steel, a lobby for major industry, said uncertainty has already affected some sales as customers refrain from ordering in hopes of more clarity in the coming weeks.
There were still questions about the conditions that need to be met to address Washington’s concerns about squeezing China out of the supply chain for strategically important materials.
“The terms of the transaction emphasize that the UK steel sector will jump over many hoops before it can see the benefits of this transaction,” UK Steel added. “To fully assess our impact on our sector, we need to fully understand the supply chain conditions that need to be met, how quotas are defined, and when these will take effect.”
A British official said the transaction would lead to a large portion of UK steel exports to the US, attracting zero tariffs, but said some specific categories of steel would still carry taxes of up to 3%. “The maximum is 3%, but most of the time there will be no tariffs,” they added.
Noble Francis, head of economics at Construction Products Association, said it is unknown which steel covers transactions used in derivative products such as vehicles, industrial parts and household items that were first included in Trump’s announcement of the 25% steel tariff in March.
“It’s important that companies make this clear as soon as possible, as they can have a significant impact on exports to the US,” he added.
Aerospace
A British aerospace executive said on Friday that there is still uncertainty about the details of the sector’s terms of trade, despite claiming that “all British aerospace components” were free of tariffs.
Official documents from the UK government said aerospace were “not mentioned” and added that the companies were still waiting for written confirmation before publicly welcoming the trade agreement with the US.
The executive also said that given the integrated nature of the supply chain, it is trying to establish whether “all aerospace” parts depicted from different countries will be exempt from tariffs or those sourced from the UK.
“Industrials on both sides of the Atlantic need to have 0% tariffs applied to aircraft parts, which has been important to the Air Force for almost half a century,” said Kevin Craven, CEO of Trade Group Advertising. The industry wanted this to be confirmed “as soon as possible.”
There is also uncertainty about the implications of military aerospace transactions, such as the F-35 fighter program led by US defense group Lockheed Martin. The UK is the only tier 1 partner in the US for the F-35, with British companies contributing about 15% of the value of each aircraft.
Analysts say Lockheed, as an importer of parts to the US, is responsible for the duties. According to people familiar with the situation, some key parts will be first delivered to Lockheed Martin in the UK before being shipped to the US.
The White House said the agreement with the UK will “maximise competitiveness and protect the supply chain of US aerospace manufacturers through priority access to high-quality British aerospace components.”
