Lessons and Next Steps from Deals with China and the UK

Summary

The Trade Guys

Episode: Lessons and Next Steps from Deals with China and the UK

Date: May 15, 2025
Podcast: CSIS | Center for Strategic and International Studies
Hosts: Scott Miller, Bill Reinsch
Moderator: H. Andrew Schwartz

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Overview

In this episode, trade experts Scott Miller and Bill Reinsch dissect the recent trade deals and negotiations with China and the UK, providing nuanced perspectives on what these agreements mean for U.S. policy, global supply chains, domestic industries, and the future of multilateral trade. With characteristic candor and wit, the Trade Guys shed light on what’s substantive and what’s show in these headline-grabbing announcements—exploring the deeper strategic, economic, and political implications.

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Key Discussion Points and Insights

1. US-China Trade Deal: De-Escalation and Its Limits

• A Step Back from the Brink

  • The US and China agreed to lower tariffs, cooling off a period of rapid escalation.
  • US tariffs on Chinese goods: now ~30%; Chinese tariffs on US goods: ~10%.
  • Both sides sent strong negotiation teams: Treasury Secretary Besant, USTR Greer for the US; China included their Deputy Minister of Public Safety, highlighting cross-cutting issues like fentanyl.
  • “What they agreed to do was continue to work but to return terms of trade...to a level that doesn’t completely obstruct trade.”
    —Scott Miller [00:51]

• Market and Political Response

  • Markets responded positively; the deal also received political approval.
  • Both sides made concessions but fundamental trade issues remain unresolved.
  • “Nothing’s fixed yet, but we’re away from spiraling out of control.”
    —Scott Miller [02:47]

• Who Blinked First?

  • Bill Reinsch suggests the US conceded more than China, a view echoed in Washington commentary.
  • The deal’s “fine print” reveals that average tariffs are closer to 51%, higher than headline numbers, and will still stifle significant trade.
  • “I think it was us. We probably gave more than the Chinese did.”
    —Bill Reinsch [03:44]
  • “Sue Schwab…figured out the average new tariff is closer to 51% than 30%.”
    —Bill Reinsch [04:25]

• Winners and Losers

  • Examples of winners (e.g., US furniture manufacturers) and losers (businesses relying on Chinese inputs).
  • Key Chinese concessions: removal of 28 companies from export control bans; some relaxation on export controls for critical minerals.
  • “There are always winners, but there’s always losers.”
    —Bill Reinsch [05:54]
  • “Manufacturers here were calling ports in Shanghai...saying, you know, start the boats again.”
    —Bill Reinsch [07:17]

• Underlying Issues Unchanged

  • Core issues (subsidies, intellectual property theft, non-market practices) remain untouched.
  • Trade deal is largely about resuming trade, not reforming it.
  • “The Chinese made no commitments on subsidies. They made no commitments on IP theft.”
    —Bill Reinsch [06:34]

• Importance of Supply Chains

  • Focus on how tariffs risked disrupting US manufacturers using Chinese components, e.g., Boeing.
  • “Supply chains are complicated, and if you slap 145% tariff on the parts and components, you’re making it much more difficult for people in America to manufacture Made in America products.”
    —Bill Reinsch [07:49]

• Enduring Leverage and 90-Day Truce

  • Discussion on whether the US can extract bigger concessions in the future.
  • China deftly increased exports to Southeast Asia—potentially relabeling for US import—raising the risk of customs fraud.
  • “The fact that both sides were ready to back off...said there were reactions and responses...they had to deal with.”
    —Scott Miller [09:32]
  • “They’re not going to agree to any of that...because for them it’s an issue of party control over society.”
    —Bill Reinsch [11:04]

• Tariffs as Industrial Strategy

  • Both hosts acknowledge the tariffs are here to stay and part of a broader US industrial “de-risking” from China.
  • Uncertainty may accelerate US businesses’ diversification away from China.
  • “There’s more in it for the United States to reduce our reliance on China as a source of imports.”
    —Scott Miller [12:10]

• Stockpiling before Uncertainty

  • Businesses expected to hoard inventory ahead of potential tariff hikes resuming post-90 days.
  • “All your Christmas purchases are going to be made now. If you’re a retailer, you’re getting delivery...in the next 90 days.”
    —Scott Miller [13:31]
  • “Trade Hoarders” reality show banter — light-hearted moment. [13:44–14:35]

2. US Economic Policy Context

• Beyond Tariffs: The "Big Beautiful Bill" and Deregulation

  • Coming economic initiatives: continuation of 2017 tax cuts, repeal/dial-back of Green New Deal-related regulations.
  • Desire to anchor oil prices at $50/barrel to combat inflation and further the Buy America agenda.
  • “In 90 days, you’re going to see a much more comprehensive picture of where the economic plan is going, and confidence will be based on that and not tariffs with China.”
    —Scott Miller [17:07]

• Impact on Energy and Domestic Production

  • Lower oil prices may discourage domestic production even as they help consumer inflation.
  • “The lower the price of oil...the more difficult it’s going to be to increase domestic production.”
    —Bill Reinsch [17:54]

3. US-UK Trade Deal: Lessons and Markers for Future Negotiations

• Structure and Substance

  • Broadly welcomed as positive news, yet largely a matter of “less bad news” instead of significant good news.
  • 80/20 split: 20% substantive concessions, 80% deferred to future negotiations.
  • Both sides made limited but material concessions (e.g., UK lifting ethanol tariff; US lowering car tariffs to 10% for first 100k cars).
  • “It was about 80%: we’re going to deal with this later. And 20%: actual substantive concessions.”
    —Bill Reinsch [20:35]

• Preferential, Not Comprehensive

  • All concessions are bilateral: none are extended to other nations (“Most Favored Nation”—MFN—status described as dead).
  • Fun moment: “Is MFN dead and does anybody care? And Ambassador Froman had the best answer, which was yes and no. Yes, it's dead and no, nobody cares.”
    —Bill Reinsch [24:03]

• Concrete Points

  • UK gets less-bad auto tariffs (10% on 100k cars, better than pending 25% but higher than prior 2.5%).
  • No deal on digital services tax; digital trade and other regulatory cooperation deferred.
  • British narrative: possible future zero tariffs on steel and aluminum; US noncommittal for now.

• Pattern for Future Deals

  • UK deal sets a template: narrow, preferential, targeted, with political wins on both sides.
  • Critics of this approach (“return to free trade, Geneva, WTO, etc.”) are out of step with current political and economic realities:
    • “The argument that really doesn’t work is let’s do it the old way, let’s go to Geneva and have a conference and won’t that be great?”
      —Scott Miller [26:33]
  • Comprehensive agreements are too slow; world has moved on to “coalitions of the willing.”

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Notable Quotes & Memorable Moments

• Scott Miller:

  • “Everybody has a plan until they get punched in the face. ...They both learn some things about themselves and about their opponent.” [02:13]
  • “But if they're less of a factor in our market...then they can have their bad practices.” [12:22]

• Bill Reinsch:

  • “I think Sue had read the fine print...the average new tariff is closer to 51% than 30%.” [04:25]
  • “You need to look at the fine print. ...There's a lot of hand grenades hidden in the shrubbery here.” [03:54]
  • “The Chinese made no commitments on subsidies. ...They made some concessions that were substantive. Lowering the tariffs...they also agreed to release some hostages...” [06:34]
  • “Is MFN dead and does anybody care? ...Yes, it's dead and no, nobody cares.” [24:03]

• Andrew Schwartz:

  • “Let’s go on to a cheerier story. That’s the UK.” [19:14]
  • Joking about pitching a “Trade Hoarders” reality show [13:44]

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Timestamps for Important Segments

• US-China Negotiations Overview & Assessment: [00:51–03:44]
• Who Blinked First? US Perspective: [03:44–05:54]
• Trade Winners and Losers: [06:22–08:39]
• Supply Chain Challenges & 232 Investigation: [07:49–08:39]
• Leverage over China & 90-Day Truce: [08:45–10:26]
• Customs Fraud and Relabeling Issue: [10:26–11:02]
• On China Ever Changing?: [11:02–12:08]
• Tariffs as Industrial Policy / De-Risking: [12:10–12:59]
• Stockpiling & "Trade Hoarders" Banter: [13:23–14:47]
• Economic Policy / Oil Prices / Broader Plan: [15:22–17:54]
• US-UK Deal Deep Dive Starts: [19:14]
• Nature of the Agreement: Substance vs. Symbolism: [20:35–22:15]
• MFN Dead / Preferentialism: [24:03]
• Future of US Trade Negotiations: [26:33–27:23]

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Conclusion

This episode offers a pragmatic, sometimes sardonic look at the realities of modern trade negotiations. The US-China truce provides temporary relief but fails to address deeper structural tensions. The US-UK deal sets a template for targeted, preferential agreements likely to dominate trade policy going forward, as multilateral, rules-based approaches recede.

Rather than breakthroughs or comprehensive settlements, the trade landscape is shifting toward managed relationships, iterative progress, and trade-offs balanced between political, economic, and strategic priorities. As always, the Trade Guys serve up sharp analysis alongside levity, making complex policy comprehensible and engaging.

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For listener questions, contact: [e-mail]

Transcript

[A]

I'm Scott.

[B]

I'm Bill and we're the Trade Guys.

[C]

You're listening to the Trade Guys, a podcast produced by CSIS where we talk about trade in terms that everyone can understand. I'm H. Andrew Schwartz and I'm here with Scott Miller and Bill Reinsch, the CSIS Trade guys. Coming up next on the Trade Guys, we'll talk US China and US UK all on the next episode of the Trade Guys. Guys. Welcome back. We got lots of trade news as always, but this time we got like a pretty early big kahuna in US China trade war, big deal this week. Scott, I want to go right to you. Is this a feel good story? What is this?

[A]

Well, sure, I think it is. It is certainly backing away from the extreme positions that both the US And China had taken in terms of tariff escalation. And I think first of all, the US Sent the right team. I think China sent the right team. So Treasury Secretary Besant and U.S. trade Representative Greer, Ambassador Greer, were the U.S. leads and they both appeared to perform very well in the talks. China also took a serious approach to it, including the Deputy Minister of Public Safety to talk about fentanyl. So they addressed some issues beyond trade that they knew were affecting trade. But in short, what they agreed to do was continue to work but to return terms of trade not to where they were when the status quo entered, but to a level that doesn't completely obstruct trade. So U.S. tariffs on Chinese goods, roughly speaking, about 30%. Chinese tariffs on U.S. goods, roughly about 10. So this represents, I think, a cooling off and a plan to go forward. So I think certainly the markets received it well. Politically it was well received. And I think what happened here, one of the reasons I think it's a good thing is you had both sides learning something about both the other party and, and their own approach to this problem. The problem of a trade deficit with China is something the president's team is determined to fix. But fixing it short term will be hard. On the other hand, when you have a big deficit country like the United States and a big surplus country like China, when the deficit country takes action to reduce imports, all the unemployment happens in the surplus country. And so China had some effects that they now have to think through. And I think this is a good point to cool off. Nothing's fixed yet, but there's at least we're away from sort of the complete spiraling out of control that many have worried about. We haven't gotten anything really done yet. But I look at it as A couple of fighters. Who is it? Mike Tyson always said that everybody has a plan until they get punched in the face. And when two teams make contact, two opponents on the battlefield, two teams in sports make contact for the first time, they both learn some things about themselves and about their opponent. And so I think that's really the good news. But both sides calm down the rhetoric and improve the terms of trade so that we're just not stopping trade completely.

[C]

Well, so let's go to a less feel good view here. This of course would be our very own trade guy, Bill Reinsch. Bill, I've been asking you this question all week. You also hosted, I believe it was six or seven former USTRs. Earlier this week we did six, six. And it was a bipartisan group. And I asked the question and you asked the question. And now I'm going to ask you the question. Who blinked first? Was it us or them?

[B]

I think it was us. And I think the consensus in the Washington commentariat, if you will, is that it was us and that we probably gave more than the Chinese did. But I start by saying I think Scott has a happier spin on it than I do. But I think he's right in the sense this is good news. I mean, anything less than 145 is good news. And it was clearly good news for the markets. It wasn't as good news. I mean, there's a lot of hand grenades hidden in the shrubbery here. It's not really 30%. It's 30% on top of a lot of the pre existing tariffs which former.

[C]

USTR Sue Schwab pointed out very clearly in your talk. Yeah.

[B]

Yes. Sue had read the fine print.

[C]

Yes.

[B]

And you need to read the fine print on this. Somebody else looked at the overall thing and did a little math and figured out the average new tariff is closer to 51% than 30. Still better than 145 or better than 170, which is what we were saying the effective rate was back several weeks ago. So big improvement, but it's still at that level is going to end up, I think, stopping a lot of trade. I think Scott made the point that it didn't solve any fundamental problems. It pulled back from the brink. Certainly the mood was better and I agree they certainly sent good negotiators to do this. I think Secretary Bessant is emerging as the administration's good cop and deserves that title because the things he's doing tend to turn out all right. And you know, he deserves credit for that. But if I were Chinese, I would thinking, look, you know, three weeks ago it was 145%. Last week Trump was saying it was going to be 80% and it ended up at 30%. You know, if we'd waited another week, maybe we could have gotten it down to 10. You know, we've been negotiating with ourselves for, you know, the last couple of weeks. And I mean, there are reasons for that because people were anticipating price increases, they were anticipating shortages. The media, print and electronic, was starting to do what they always do, which is to dig up people that are going to be victims, you know, and go to small business people who are going to go out of business because whatever they need, they can't get anymore because the tariff is exceptional. And to be fair, they've also been going to businesses that are very happy. There was a story just today that we're recording this on Wednesday, this week in the Washington Post about a company in Erie County, Pennsylvania, in the Northwest, that makes tables and chairs and dance floors, basic, not high fashion ones. And this makes them competitive. And so, you know, there are winners. There always are winners, but there's always losers. What didn't happen was, and nobody expected to happen, was any change in the fundamental issues that divide us. You know, the Chinese made no commitments on subsidies. They made no commitments on IP theft. They made no commitments on treating anybody differently in China. They made some concessions that were substantive. Lowering the tariffs. Their tariffs was one. They also agreed to release some hostages in the sense that they had imposed export control bans on selected companies. And they removed 28 of them from that list this morning. Well, this morning our time, I guess, yesterday their time. That's a good thing. And they indicated that they were going to relax some of their export controls on critical minerals. That's a good thing, too. So, you know, we got stuff. And what they got was in all, you know, to a certain extent, a resumption of trade. And the earlier reports were people were, you know, manufacturers here were calling ports in Shanghai and elsewhere saying, you know, start the boats again.

[A]

Yeah, ship it.

[B]

Yeah, load up and start shipping. And that's an important point because the problem here was never just going to be empty shelves, because what they were going to be empty of was toys, you know, the dolls and the pencils that Trump talked about.

[C]

Well, yeah, he said, you know, we only need to give our kids two or three dollars this year. So nobody needs 20 dolls.

[B]

That one's going to haunt him for a long time.

[A]

I think so.

[B]

But the real problem was our manufacturers making American products that are using parts and components from, among other places, China. I was doing a little research today, and, you know, one of the issues that is going to come up because there's a 232 investigation started on commercial aircraft. Boeing planes contain some Chinese parts. I don't know that they're indispensable, but they're there. Supply chains are complicated, and if you slap 145% tariff on the parts and components, you're making it much more difficult for people in America to manufacture Made in America products. To me, that was the biggest threat here. And the administration, I think, deserves some credit for figuring that out and trying to head it off. That said, you know, and Scott said the same thing. They've kind of kicked the can on the substance and we'll see how far they get. They didn't get very far the first time in his first term on serious issues. And I'm still saying I don't think they're going to get very far the second time, but this is good news.

[A]

But they are serious about keeping Chinese goods more expensive in this market than they were.

[C]

There you go. I have a question to you guys, though. It's pretty clear that the Trump administration counted on having leverage over China. They have studied pretty thoroughly China's housing market, its impact on the population. There's, you know, we could do a whole podcast on, you know, why the Chinese housing market plummeting really affects its citizens. Because it's their primary investment vehicle that regular Chinese citizens have. They don't really have access to their stock market. Or if they do, it's volatile and it's not safe. It's not a safe investment. I guess the question is, does the United States really have leverage over an authoritarian regime like this? And during and after these 90 days, are we going to be able to extract the kinds of concessions and deal that we hope to get?

[A]

Well, time will tell. What I would just say is that the fact that both sides were ready to back off and ready not to make things worse said there were reactions and responses that they had to deal with. They weren't expecting. Okay, so I don't think the Trump administration was expecting visits from the CEOs of the big retailers saying we're going to have empty shelves, those kinds of things. Likewise, plant closures in China may have been a shock. I don't know how much they prepared for these things, but they got a response and they learned some things from that. But the key learning was we need to back off and make another approach, which I think is likely. I don't know whether any of these long term unfair trade issues are ever going to be resolved. But in the meantime, it's a better position now than it was a week ago. And I think it's a satisfactory position for at least the United States to move forward.

[B]

Two things on that. One, Chinese manufacturers are very agile and one of the things we saw in April was a sharp decrease in Chinese exports to the United States. Entirely predictable. What we also saw was a sharp increase in Chinese exports to Southeast Asia. And the unknown at this point is how many of those exports to Southeast Asia ended up being relabeled and then shipped to the United States as products of those other countries.

[C]

Right, because this is the workaround issue that you both have been talking about, Right. You guys don't like when people tear off labels and add new labels.

[B]

And you know, we don't like that. That's fraud.

[A]

It's customs fraud.

[B]

Yeah, that's right.

[C]

Custom fraud.

[B]

But the other thing is going back to Scott saying time will tell. My attitude is time already told and it told in the first term where we came in with big demands. And I think as we've talked about before, they were good demands. You know, stop subsidizing, impose some, you know, market rules in your economy, stop stealing ip. You know, create some confidence in the private sector market in China. The Chinese are not going to agree to any of that. They didn't before, they won't again. Because for them it's not an economic issue, it's an issue of party control over the society because effectively relaxing their economy, putting their economy on more of a market based basis, decreases the party's control. They're not going to agree to that. They didn't agree to it before, they're not going to agree to it again. We're going to end up with. That's not to say there won't be a deal, but it's going to look like the last one. They're going to buy more stuff, maybe they'll make a few concessions. And as we will talk about when we get to the British deal, I mean, the way these things are scoping out is countries have figured out that you make a few concessions, you let Trump declare victory and then you move on. I think we'll see it with China too.

[C]

Scott, do we move on?

[A]

Well, look, I think there are other ways to win for the United States than getting China to change practices. I think there's more in it for the United States to reduce our reliance on China as a source of imports and to have these tariffs as a component of sort of made in the usa. So I think there's more going on than just, yes, China has bad practices, yes, they haven't changed them and yes, we probably won't get them to change them. But if they're less of a factor in our market and around the world, then they can have their bad practices.

[B]

You know, this is interesting because this may actually be one benefit of uncertainty. We spent a lot of podcasts talking about how awful uncertainty is, how it deters investment and makes everybody sit on their wallets. One thing uncertainty does do, I think with respect to China, is encourage Americans to de risk.

[A]

Right.

[B]

And to develop supply chain alternatives to China. I think that's part of what the administration wants and all the uncertainty we've just been generated and the future uncertainty, because this is a 90 day thing. You know, we didn't mention that this is not a permanent reduction in tariffs.

[C]

That's right.

[B]

Another pause. So another yo, yo. We'll see what happens in 90 days. That kind of uncertainty holds businesses back.

[C]

And during these 90 days, isn't everybody just going to hoard?

[B]

There's going to be a lot of stockpiling. Yes. Scott, what do you. I think that we're going to see a lot of shipments the next couple of months.

[A]

We saw it once already, so there will be some for certain. I think all your Christmas purchases are going to be made now. If you're a retailer, you're getting delivery for everything you need to sell through Christmas in the next 90 days.

[C]

So I think we should start a new show and pitch it to Hollywood called Trade Hoarders.

[A]

We can have celebrity hoarders, too.

[C]

Seriously. I mean, trade Hoarders, you could go, you know, from company to company. You could go into people's homes, like people who are, you know, hoarding Christmas ornaments like you just said, Scott. I mean, you know, like this could be a Christmas pretty serious reality show.

[B]

Do you suppose we're going to see people hoarding pencils? I mean, that would be interesting.

[C]

Well, he keeps talking about pencils. Like I was watching Bill Maher the other day and Bill Maher said, who the hell uses a pencil these days?

[B]

Well, apparently it's somebody. The American company's cranking them out with enthusiasm. Somebody uses them.

[C]

I like pencils better than ink.

[B]

If you make a mistake, you know, that's for sure. Which I make many. I like the erasers.

[C]

Think of how many pencils there are on the golf course. Those little mini ones, those are awesome.

[A]

And I pencil is of course one of the great stories of how spontaneous order comes from market economies. There you go. Where nobody knows how to make a pencil, but yet you can buy them for pennies.

[C]

Pennies. Well, okay guys, let's put a cap on China here. We got 90 days. We'll see what happens. I'm hearing from you that we have confidence in Secretary Bessant. I'm hearing from you that this is a feel good, semi feel good story. What do we think is going to be next? Are we going to take it down to the wire in these 90 days and then is the market going to fluctuate again? And then more importantly, maybe than the stock market? You know, is this restoring confidence in the US in terms of the bond market? Is it restoring confidence in terms of other countries wanting to invest in the United States? Is it restoring confidence in our dollar, et cetera?

[B]

Well, the market seems to react on a day to day basis. It certainly restored confidence on Monday. What, whether that's sustained or not, I think, you know, it's going to fluctuate in at least equities I think are going to fluctuate based on the news of the day. If there's some bad unemployment news on, you know, first week of June, that'll, you know, you just have to roll with that.

[A]

But keep in mind, in the next 90 days you're going to see some real details on the remainder of the economic plan. You'll have a tax bill. Okay, look, the tax bill is very interesting because it's basically an extension or improvement of the Tax Cuts and jobs act from 2017.

[C]

This is the so called big beautiful bill.

[A]

The big beautiful bill. And basically the Ways and Means committees decided to pay for it with all the previous stuff from the Green New Deal they didn't want to do. All right, so the second thing that's going to happen is deregulation is going to hit the accelerator. People are going to start to feel the fact that. And once again, many of the Green New Deal regulations are going to be regular repealed or dialed back. There's a lot of effort in that direction. And keep in mind, the president really wants $50 a barrel of oil. They've pushed oil low enough. It was in the mid-60s yesterday. He wants it low for foreign policy reasons. But also energy abundance is part of the Buy America story. And so $50 a barrel of oil basically erases inflation. And all of a sudden in 90 days you've got a very strong picture of the total plan of which tariffs are a part Of. And by the way, a 10% tariff on $3 trillion of imports is $300 billion of tax credit that you don't have to get.

[C]

You know, I got to say, I'm not so sure that a $50 barrel of oil reduces inflation, because when I go into the deli to get my Diet Coke now, it's like $3.54. That's not cool.

[A]

Yeah, look, there are residual effects, but we talked about farming, we talked about a lot of inputs that require energy as a key component. My point is, in 90 days, you're going to see a much more comprehensive picture of where the economic plan is going, and confidence will be based on that and not tariffs with China.

[B]

So, Andrew, you're drinking oil now, is that what you're saying?

[C]

No, I'm not drinking oil. I'm not drinking oil. I'm trying to convince my wife that there's no oil or debris in the water off the coast of Malibu so we can return this summer. So oil is a bit of a sensitive subject. So is fire retardant. So is fire debris. I am drinking Diet Coke. Some people refer to Diet Coke in derogatory terms, Bill, but I am a big lover of it.

[A]

You and the President, right?

[C]

That's right.

[B]

And Bill Clinton, well, one of the ironies of what he's doing, though, is the lower the price of oil, which is good for inflation, the more difficult it's going to be to increase domestic production. And we're already seeing, you know, flat data on new drillings in the United States. And the oil companies are holding off new production partly for economic reasons because they're not certain about the price. And, you know, it's just trade offs. You know, if you want lower gasoline prices, if you want lower prices at the pump, you know, what he's doing is getting us there slowly. But, you know, the cost of that is going to be a slowdown in the growth of domestic production. And, you know, doing what he's doing to counteract that, drilling on federal lands, more permitting, opening up Alaska, et cetera, et cetera, et cetera. You know, that's not going to make any difference if the economics isn't there. You know, if the companies don't think they can make money on a new well, they're not going to drill it.

[A]

Count on Bill to see the darkness at the end of a bright new day.

[B]

That's.

[C]

There you go. There you have it.

[B]

Getting back. Wait, wait, before we do, getting back to your very first question, which we passed over.

[C]

Yes.

[B]

Yeah, it is going to go down to the last day because trade negotiations always go down to the last day.

[A]

Right? Right.

[B]

You need a deadline and Trump has given them one. You're going to see a resolution, I would say, on the 89th day. That's just the way it works.

[C]

Right.

[B]

And there may even be a postponement.

[C]

If your timing dips in and rises in the stock market. Keep that in mind, I guess. Let's go on to a cheerier story. That's the UK we have a deal with the UK that's exciting. Last time I checked, there are special friend and top ally. And now many people tell me that they can get Mini Coopers very easily. Others tell me that Rolls Royce is going to be easy to get. But those are for few and far between guys. What's up with the UK deal?

[B]

Yeah, the Bentley people and the Rolls people are probably patting themselves on the back. So are the Land Rover people. And they, they have a bigger market.

[C]

They have a very big market in Bethesda, Maryland. I can tell you that one of.

[B]

The things we learned about this, and I was talking to a different government about this yesterday, the British have one big advantage over a lot of people. They have a king.

[C]

Yes.

[B]

And Trump loves kings. And one of the things that so do the Saudis. One of the things that Starmer, Prime Minister Starmer, did when he came to visit was he brought a letter, a handwritten letter from the king inviting Trump to come visit him at Buckingham Palace. That's gold in these kinds of negotiations. But getting back to the subject matter, which is the agreement, it is good news. But it's like a lot of things, you need to look at the fine print. But I think it's interesting because it has a lot of lessons for other agreements coming up, you know, and I've encouraged other countries that are going through this process to look at the UK agreement very closely because there's lessons there. I wrote a column on this this week for anybody that cares about my columns. You can read it there. But I viewed this as kind of an 80, 20 split. It was about 80%. We're going to deal with this later. And 20%, actual substantive concessions. And I think that kind of split is going to show up in future agreements. You have to do something substantive, otherwise it doesn't pass the laugh test. You know, if everything is just kicking the can, people are going to say it's not a real agreement. So you have to have something that is a tangible benefit, which was the term that was going around in the biden administration about the late lamented ipef. You need some tangible things. And there were some in this case. And the interesting thing about it is it was not as expected. All give by the UK and no give by the US The US made some concessions too. The British agreed to take more of our beef. They got rid of their ethanol tariff, which is a big deal. We made a deal on cars and we basically, I think what's going to happen is people have to get used to the idea that in all these agreements there's not really any good news, there's bad news and there's less bad news. And what the UK got was less bad news. So the auto tariff, which was going to be 25%, is now going to be 10% on the first hundred thousand cars that they import. Well, last year they imported 102,000 cars, so that's about status quo. But 10% is a lot more than two and a half percent, which is what it used to be, but it's better than 25. So it's, you know, less bad news. That's good for the British. They did not give up the digital service tax despite a lot of pressure from our services industry to get them to do that. So they got to keep that. And the 80% part. There was a lot of discussion about doing digital trade agreements and doing a variety of other things, looking at a variety of other issues and I hope they do. I mean they're all good things to look at and they're areas where we can, you know, where we can make some progress. And neither the British nor the United States made any concessions on sanitary and phyto sanitary standards, which means our chicken store aren't going to get in, which disappoints me personally. I've fought the chicken war for a long time. So there's a number of things that weren't there. The United States made some concessions that were material, like on cars. And the British description of the steel and aluminum provisions were we've set up a structure in which they will ultimately get to zero tariffs on steel, aluminum. The agreement doesn't actually say that. And the United States government has not denied what the British are saying, but neither has it confirmed what the British are saying. So we'll see how that plays out. But that would be significant. But at the same time, the overall tariff rate was 10%. The United States did not concede on that. And it looks like it's not going to concede to other people on that. And finally, the thing that to me, that's Interesting about it is these were all preferential concessions. That is, the concessions the United States made to the UK were for the UK only, and vice versa. These were not most favored nation concessions. We didn't change the car tariffs for anybody else, you know, and we're not changing the steel tariffs for anybody else. And the British are not rolling back their ethanol tariff for the Brazilians. They're just doing it for us. And if you recall, one of the most succinct answers during our former USTR event on Monday was when I asked the group, is MFN dead and does anybody care? And Ambassador Froman had the best answer, which was yes and no. Yes, it's dead and no, nobody cares. And I think that that was a great answer. And it was the only short one in the entire event.

[C]

Got a big laugh, I recall.

[B]

Yes. But I think he was right. It is dead. And I reminded the audience that we helped kill it in our Commission on Affirming American leadership, indeed, in 2020 and 2021, where we recommended essentially the same thing, coalitions of the willing doing more liberalization in a closed system just for themselves and cutting other people out. So it is dead. Does it matter? I don't know. It's kind of a sad note for the Bretton woods system.

[A]

Well, look, I agree with Bill on the UK deal. He's got a great summary of it. It looks and whacks a lot like the bilateral deals that President Trump worked on in the first term. It was an agreement with Japan, and it has that kind of model, which is it's not mfm. It's a preferential agreement of some sort of. It's not comprehensive. It focuses on identifiable products or areas that have been sort of stubborn, difficult to deal with over the years, and both sides find a little way to declare victory. There's a picture of smiles around the table at the end, and life goes on. And I think that's what we're going to see as a pattern. First, the 10% tariffs sticking. That's the baseline. You can think of it as a value added tax. You can think of it as a carbon tax, whatever makes you sleep better at night, American imports are going to have a 10% tariff on them. All right. The second thing is that what I realized out of this, and I agree with Bill's framing of this, that now that there's a pattern, a lot of the agreements will look like this. But it made me realize how the critics have got to find better arguments, because the critics, first of all, talking about free Trade in this way is falling on deaf ears. I mean, I look, I've been a free trader all my life. Open markets, I think are much better for people. But after the China shock and what's happened to incomes, real incomes, over the last 30 or 40 years to the non college educated in the U.S. you can't make that argument. So that's number one. Number two, when it comes to violating our commitments to the WTO or implementing trade restrictive measures, the U.S. has a lot of company. You look at the thousands of measures that have restricted trade since the great financial crisis in 2008, 2009, we're by no means alone. And the argument that really doesn't work is let's do it the old way, let's go to Geneva and have a conference and won't that be great? Well, look, the last time the US Negotiated a bilateral comprehensive free trade agreement, it was with Korea. That was launched in 2005 and it entered into force in 2012. As I checked that seven years. The Doha Round got absolutely nowhere in 15 years. All we did was launch it in 2001 and the organization stopped talking about it in 2015. So President Trump is not going to wait around for the old way to work. And politically, nobody is really trying to sell the free trade works as we know it does. So however this works out, there is a pattern for the UK that the UK has set. Other agreements will probably look a lot like it, which I think gives some predictability. But opponents need a better argument.

[C]

Scott, I'm not sure that we could say anything that's going to help Bill sleep better in the short term. But I do know that he's got to get out of here because he's got a meeting down the street. So let's wrap it up this week for the trade guys. We'll come back next week with much, much more. Thanks as always, boys.

[A]

Thank you.

[B]

Thank you.

[C]

To our listeners. If you have a question for the Trade guys, write [e-mail] that's tradeguyssis.org we'll read some of your emails and have the trade guys react to it. You've been listening to the Trade Guys, a CSIS podcast.