President Trump’s U.K. trade deal benefits luxury imports, delays relief for U.S. automakers

U.S. auto companies find themselves in a tough spot regarding President Trump’s new trade agreement with the U.K. Do they express their frustration that there’s still no Mexico-Canada deal? Or sit quietly and hope one comes together sooner than later? 

No surprise that the Detroit Three automakers appear to be taking the latter approach, cautious not to poke the bear, as they continue to work with the Trump Administration behind the scenes. However, others aren’t holding back on the President’s decision to negotiate a trade deal with Britain before solidifying a new United States-Mexico-Canada Agreement (USMCA). 

First things first: President Trump’s move to ink a trade agreement with the United Kingdom first is because it’s an easier deal to pull together than hammering out a new USMA agreement.

• The U.K agreement includes Britain dropping its tariffs on U.S. beef, ethanol, and other products—and dishing out $10 billion for Boeing airplanes. 

• In return, the U.S. would lower the 25% tariffs enacted by Trump in April on all vehicles and steel imported to the states. 

• The first 100,000 vehicles imported from the U.K. would be subject to 10% tariff, with the levy increasing to 25% after 100,000—though industry data reveals that only about 103,250 British brands were shipped to the U.S. last year.

Digging in: Critics of the U.K. deal say that the agreement prioritizes Britain over the U.S. auto industry, raising concerns about Trump’s next move in his global trade negotiations—with one critic likening the U.K. deal to a character on the TV show, “Seinfeld.”     

• The U.K. agreement makes it cheaper to import a U.K. vehicle with very little U.S. content compared to a USMCA-compliant vehicle from Mexico or Canada that is half American parts, according to American Automotive Policy Council President Matt Blunt.

• Lana Payne, national president of Unifor, Canada’s auto workers union, called the U.K. agreement a “backward move” and a blow to North American auto workers if the aim is to enhance the domestic auto industry—and one that sets a dangerous precedent.

• The trade deal with Britain could negatively impact the U.S. car industry near-term and long-term, depending on how it plays out, says Wall Street analyst Dan Ives, calling the administration’s move a "George Costanza moment." 

Bottom line: The new U.K. trade deal could be a political win for President Trump globally and some luxury imports, but it’s a strategic gamble for U.S. automakers, with little pay off for the vast majority of car shoppers and dealerships in the states. 

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