Trump's UK-US trade deal: what is Britain getting and what is it giving away?
As much as Jonathan Reynolds' opponents will hate to admit, it has been a positive week for the Business and Trade Secretary. But it is only Thursday.
The ink on Britain's landmark post-Brexit trade deal with India had hardly dried before the news broke that an agreement with the US was imminent. Writing on Truth Social overnight, Donald Trump said it was a 'great honour' to have the UK be the first trade deal signed with the United States, claiming it will be 'full and comprehensive'.
The devil will, however, be in the detail. And notably, UK officials are already seeking to temper expectations.
Rather than serving as a full-blown trade pact, some observers suggest the announcement may only include a 'head of terms' outline, setting out the broad perimeters of the deal while negotiations continue.
Even so, the initial framework will be significant. Here are the sectors likely to be most affected.
The threat of 25pc tariffs to struggling British car manufacturers has been at the forefront of negotiators' minds.
It is understood that a trade deal with the US would lower this rate for an agreed quota of imports, cushioning some of the blow.
Despite not yet knowing what the new tariff rate will be, this will no doubt serve as a major win for Britain.
The Institute for Public Policy has warned that 25,000 jobs in the car industry were at risk from 25pc tariffs, hitting Britain's industrial heartlands the hardest.
The carve-out would be particularly valuable for companies such as Jaguar Land Rover, as the US market generates most revenue for the carmaker.
However, the concession will not come cheap, as the UK may in turn have to reduce tariffs on American car imports.
There is also an expectation that the UK will be spared the worst of steel tariffs, which rose to 25pc after Trump kicked off his trade war in February.
It is not clear whether British aluminium exports would also be included in a deal with the White House or if it would only cover steel.
The UK sells around 200,000 tonnes of steel a year to the US, worth over £400m.
Britain's aluminium sector has also warned of an existential threat from the tariffs, with 10pc of its exports sold to the US for a value of £225m.
Securing a concession from Trump would therefore be crucial for the industry.
One of the biggest concessions Britain will have to offer to protect its manufacturing industry is expected to be related to the Digital Services Tax, which affects tech giants such as Google and Meta.
In 2020, the Government introduced a 2pc levy on revenues from search engines, social media services and online marketplaces, which yields around £800m a year.
The US president has previously compared digital taxes of this type to 'overseas extortion'.
However, if Reynolds agrees to cave into US tech billionaires, it is likely to enrage backbench Labour MPs, who are already up in arms over welfare cuts.
On a more positive note, ministers believe there is scope to secure a better deal on services with the US, which account for a far greater proportion of US exports than goods.
The UK sold £137bn of services to the US last year, making up for than a quarter of all such exports.
Experts believe a full-fat trade agreement with the US, like the one Theresa May tried to secure during her premiership, is off the table because of red lines over food standards.
British ministers have explicitly ruled out accepting controversial products like chlorinated chicken and hormone-fed beef, much to Trump's dismay.
Accepting such food standards would make it impossible to achieve a veterinary agreement with the EU, which was a Labour manifesto pledge to prevent border checks and lower prices.
However, Britain is expected to offer to lower import duties on other American agricultural products. These could include nuts, soy beans and wine.
Trump is yet to announce how hard he plans to hit foreign pharmaceutical companies.
This is a particular concern for some of Britain's biggest companies, such as GSK and AstraZeneca.
The US president has said he will set out levies on the sector over the next two weeks, after launching an investigation into the national security implications of such imports at the start of April.
It is understood that pharmaceuticals have been a sticking point in UK negotiations with the US.
Any meaningful deal for the UK would have to include the industry. However, a failure to secure a more comprehensive agreement this week suggests the issue remains unresolved.
The UK sold £6.5bn worth of pharmaceuticals to the US last year, making it one of the top exports.
Trump warned on Sunday that he planned to hit foreign film imports with tariffs of 100pc, in another late curveball complicating negotiations.
While taxing services is notoriously difficult and details remain scarce, UK film insiders have warned such tariffs could 'wipe out the UK industry'.
Film and TV are seen as some of the UK's most successful service exports, but have struggled to recover under high interest rates and after Hollywood strikes.
The UK Government was in 'active discussions' with the White House about these tariffs, Chris Bryant, the culture minister, said on Wednesday.
The overall economic impact of a US trade deal hinges on how comprehensive it will be. The expectation is that UK exporters will still be subject to 10pc tariffs across the board.
Allan Monks, an economist at JP Morgan, said that the scope of the deal 'looks limited' and 'the economic impact for the UK is likely to be very small'.
Monks put the overall boost to GDP at a measly 0.1pc, but said it would help key industries.
He warned that Britain's attempt to get a reset in EU relations ahead of a summit on May 19 meant 'subsequent progress on key outstanding issues with the US could become harder'.
He said: 'If there is no further breakthrough on the US baseline tariff, that would significantly limit the economic upside from continued negotiations and further concessions.
'With the UK having broadly balanced goods trade with the US, a reasonably good political relationship, no real threat of retaliation from Westminster and extensive bilateral negotiations having taken place, it is not clear where the UK can go from here.'
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