Unpacking the details of the US-UK trade deal

Summary

Marketplace Morning Report: Unpacking the Details of the US-UK Trade Deal
Hosted by Marketplace | Release Date: May 9, 2025

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1. Introduction to the US-UK Trade Agreement

In this episode of the Marketplace Morning Report, host Liana Byrne delves into the newly announced trade deal between the United States and the United Kingdom. The agreement introduces significant changes to tariffs and trade regulations, aiming to bolster economic relations between the two nations.

2. Key Provisions of the Trade Deal

The US-UK trade deal encompasses several critical adjustments:

• Automotive Tariffs: Car import tariffs have been reduced from a staggering 25% to 10%, providing substantial relief to the automotive sector.

• Steel Duties: Duties on steel imports have been decreased, benefiting the manufacturing and construction industries.

• Beef Trade: The agreement permits the trade of up to 13,000 metric tons of beef annually between the US and the UK without tariffs. However, it's important to note that most UK goods will still incur a 10% duty.

Liana Byrne explains:
"Markets have been reacting to this new tariffs deal between the US and the UK... including slashing tariffs on car imports from 25% to 10% and cutting duties on steel." [01:01]

3. Reactions from British Chambers of Commerce

William Bain, representative from the British Chambers of Commerce, expressed cautious optimism regarding the deal.

William Bain:
"It provides tariff relief which is much needed in key sectors of the economy like automotive, steel and aluminium products... But we are very mindful that there are many other industries, from clothing to industrial products, which still face these additional 10% tariffs." [01:43]

He emphasized the importance of further reducing tariffs for other sectors to ensure comprehensive economic benefits.

4. Concerns from British Farming Sector

Despite the tariff reductions, the beef deal has raised alarms among British farmers. Liz Webster from Save British Farming voiced her skepticism.

Liz Webster:
"I'm very sceptical about doing deals with America in particular or any big food producers who've got a huge advantage over us... We're a small island with a big population." [02:30]

Webster highlighted the challenges UK producers may face in competing with cheaper imports, potentially threatening local agriculture.

5. Exclusions: Film and Pharmaceuticals

The trade agreement notably excludes major sectors such as film and pharmaceuticals. Recent tensions arose when President Trump threatened a 100% tariff on foreign-made films, causing concern for the UK's creative industries.

Darren Jones, UK’s Chief Secretary to the Treasury:
"We want to protect those sectors in the UK. British pharmaceuticals play an important role in the American supply chain... and creative arts... we know this is a huge British export that is enjoyed by millions of people around the world." [02:43 - 03:03]

Jones assured that negotiations are ongoing to safeguard these vital industries, emphasizing their mutual benefits and cultural significance.

6. Impact on Global Markets

The trade deal has had a noticeable impact on global financial markets:

• Wall Street: Major indices closed the day up by approximately half a percent to just over one percent.

• Asia Markets: Mixed reactions with Mainland China's stocks declining, Hong Kong's Hang Seng remaining flat, while Japan's Nikkei 225 rose by 1.5%.

• Europe: The Stoxx 600 increased by 0.4%.

Katie Silver from the BBC’s Singapore bureau noted:
"Perhaps there's some hopes that from the UK deal that it may mean that there's hope for US allies who have also been having negotiations such as Japan." [03:38 - 04:24]

7. Ongoing US-China Trade Discussions

Amid the US-UK deal, talks between the US and China are underway in Switzerland. Recent data revealed that China's exports to the US declined by 20.1% in April compared to the previous year, adding complexity to the global trade landscape.

8. Corporate Responses: British Airways and Inditex

• British Airways: The airline has placed orders for over 50 new planes from Boeing and Airbus, signaling confidence in expanding its fleet amidst the improved trade relations.

• Inditex (Zara): Celebrating its 50th anniversary, Inditex has called for stricter regulations on Chinese retailers like Shein and Temu, who currently ship low-value goods to the EU and UK duty-free.

Oscar Garcia Matheris, CEO of Inditex:
"For us, it's critical to provide customers fashion that is inspirational, aspirational, with quality, creativity, design, and sustainability. What we have been asking for is a level playing field everywhere." [07:11 - 07:36]

Matheris emphasized the need for fair competition to maintain the company's market position against emerging online players.

9. Zara’s Operational Insights

Emma Simpson's visit to Zara's headquarters in Galathea, Spain, provided an inside look at the company's operations:

• Production Strategy: Zara produces over half of its clothing close to home, operating its own factories to ensure rapid response to fashion trends.

• Innovation and Sustainability: Celebrating five decades of innovation, Zara continues to adapt to a fast-changing fashion landscape while maintaining sustainable practices.

Marco, Pattern Maker at Zara:
"When you finish the item and see that it looks good and it goes into production and then sometimes it sells out, it's marvellous." [05:11 - 06:13]

10. Concluding Insights

The episode wraps up with reflections on the evolving nature of global trade agreements and their far-reaching implications across various industries. Host Liana Byrne underscores the importance of continued negotiations to address outstanding issues and foster a balanced economic relationship between the US and the UK.

Liana Byrne:
"I'm Liana Byrne with the Marketplace Morning Report from the BBC World Service." [07:45]

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This comprehensive overview captures the multifaceted discussions surrounding the US-UK trade deal, highlighting its implications for key industries, market reactions, and the broader global economic context. For those seeking to understand the nuances of this agreement and its potential impact, this episode provides valuable insights and expert perspectives.

Transcript

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[Liana Byrne]

Let's take a closer look at what this UK US Deal really means. Good morning, this is the Marketplace Morning Report and we're live from the BBC World Service. I'm Liana Byrne. So markets have been reacting to this new tariffs deal between the US and the UK the two sides announced a range of changes, including slashing tariffs on car imports from 25% to 10% and cutting duties on steel. They'll also allow up to 13,000 metric tons of beef to be traded between the two countries each year, tariff free. Having said that, most UK goods will still face 10% duty. William Bain is from the British Chambers of Commerce, which represents companies across the.

[William Bain]

Uk it provides tariff relief which is much needed in key sectors of the economy like automotive, steel and aluminium products. And we know from our contacts with businesses over the last eight weeks how much harm and damage that the very high 25% tariffs were doing in these sectors. So there will be a welcome from those sectors. But we are very mindful that there are many other industries, from clothing to industrial products, which still face these additional 10% tariffs and we are not going to abandon our ambition to see those tariffs reduced further.

[Liana Byrne]

Meanwhile, the beef deal is sparking concerns among British farmers. Liz Webster from the group Save British Farming says UK Producers could struggle to compete with cheaper imports.

[Liz Webster]

I'm very sceptical about doing deals with.

[Liana Byrne]

America in particular or any big food.

[William Bain]

Producers who've got a huge advantage over us.

[Liz Webster]

We're a small island with a big population.

[Liana Byrne]

And then some major sectors were left out of the agreement, most notably film and pharmaceuticals. Just this week, President Trump threatened to oppose a 100% tariff on foreign made films. That's a big worry for the UK. Darren Jones, the UK's chief secretary to the treasury, told the BBC that negotiations on those issues are still ongoing going.

[Darren Jones]

We want to protect those sectors in the uk. British pharmaceuticals play an important role in the American supply chain. So there's already mutual benefit, but in terms of film, but also broadly creative arts, whether it's music or theater or art itself, we know this is a huge British export that is enjoyed by millions of people around the world. And we want to be able to continue to share that. I think President Trump said yesterday that James Bond has got nothing to worry about. And of course, we're going to continue to make the case to protect that, both in the interest of companies in the UK that produce these goods and services, but also to the millions of people, including the American people, that enjoy the benefit of them.

[Liana Byrne]

That was UK Treasury Minister Darren Jones. Now China says its Exports to the US fell by 20 foot 1% in April compared to the previous year. The figures come the talks between the world's two largest economies kick off today in Switzerland. The BBC's business reporter in Singapore, Katie Silver has been gauging market reaction to.

[Liz Webster]

The talks on Thursday's trade. The major indices in Wall street ending the day up about half percent to just over a percent. Here in Asia, the picture is mixed. Mainland China, for example, the stocks are down. Hong Kong's Hang Seng, which is generally has many Chinese companies, is flat. But there have been big gains in the likes of Japan and Taiwan. And so perhaps there's some hopes that from the UK deal that it may mean that there's hope for US allies who have also been having negotiations such as Japan.

[Liana Byrne]

Katie Silver reporting. Now let's do the numbers. As we've heard, some optimism in global markets after the UK US tariff deal and those US China talks today. Europe's Stoxx 600 is up 4/10 of a percent and Japan's Nikkei 225 closed up 1.5%. And the owner of British Airways has ordered over 50 new planes from Boeing and Airbus worth billions. Now you know this company, Inditext, it's the global fashion giant which owns Zara. Well, it's called for rules to be tightened for Chinese retailers Shein and Temu, which can currently ship low value goods to the EU and UK duty free. This year, Zara is celebrating its 50th anniversary and the BBC's Emma Simpson visited its headquarters in Galathea in northern Spain.

[Emma Simpson]

Zara is one of the most recognizable brands in the world I'm standing in a big building right at the heart of the business for a rare glimpse behind the scenes at Zara hq. It feels more like some big technology campus than a retailer, with its sleek windows and gleaming white corridors. Marco is a pattern maker and has been here 42 years. What does it feel like to see the clothes you have made worn by women on the street? When you finish the item and see that it looks good and it goes into production and then sometimes it sells out, it's marvellous. Zara is owned by Inditex, the world's biggest fashion retailer. It runs a host of brands from Pullen, Bear and Stradivares to Bershka and Massimo Dutti. Oscar Garcia Matheris is Inditexas CEO. He was born in 1975, the same year Zara opened its first shop.

[Oscar Garcia Matheris]

Reaching the 50th anniversary of the company is an important milestone and for us, these 50 years has been a long period of innovation.

[Emma Simpson]

Zara makes just over half of its clothes close to home. It has a factory here on site and owns and operates another seven nearby, producing small batches of garments. They also work with factories in neighbouring Portugal as well as Morocco and Turkey, enabling them to respect respond quickly to the latest trends. More basic staples are produced with longer lead times in countries like Vietnam and Bangladesh. But is Zara starting to lose its shine after posting slower sales growth at the start of this year? And now there are new names disrupting the market. The fast growing ultra cheap online players Shein and Temu, which ship their goods from China. Does that trouble you?

[Oscar Garcia Matheris]

For us, it's critical to provide customers fashion that should be inspirational, aspirational, with quality, with creativity, with design and sustainable. What we have been asking for is a level playing field everywhere in order to have the same set of rules for any single competitors.

[Emma Simpson]

Zara revolutionized the way we shop. But it's now got to navigate a fast changing landscape in fashion and in the world economy.

[Liana Byrne]

Emma Simpson reporting. And I'm Liana Byrne with the Marketplace morning report from the BBC World Service. Can we invest our way out of the climate crisis? Five years ago it seemed like Wall street was working on it until a backlash upended everything. So there's a lot of alignment between the dark money right and the oil.

[Oscar Garcia Matheris]

Industry on this effort.

[Liana Byrne]

I'm Amy Scott, host of How We Survive, a podcast from Marketplace. In this season we investigate the rise, fall and reincarnation of climate conscious investing. Listen to How We Survive wherever you get your podcasts.