Win for UK cars will not cushion the probable blow to taxpayers

Good morning. The Labour government has reached a limited agreement with Donald Trump on trade, securing reductions in punitive tariffs on car and steel exports, but failing to reverse a 10 per cent levy that applies to most goods. Some thoughts on the broader politics of that below.

Reckoning coming

From the Labour government’s perspective, the biggest and most important thing about the deal the British government has reached with Donald Trump is that it provides considerable relief for Jaguar Land Rover from Trump’s tariffs. Maybe other countries will get a better deal by settling later than the UK, or not at all, but the company most sharply hit has received a reprieve from the extra 25 per cent tariffs on cars and metals that had been previously set by Trump’s administration:

British exports of steel and aluminium would now be zero-rated for tariffs, according to the UK government, while the first 100,000 British cars sold in the US annually — the vast majority of the total — would be subject to a reduced 10 per cent levy.

The ghost at the feast here is USMCA, the deal that Donald Trump struck with Canada and Mexico in his first term. Now he regards that deal as inadequate and is pursuing an aggressive land-grab against both his immediate neighbours.

The biggest problem with this deal from a UK perspective, however, isn’t that Trump may renege on it. It is that success in negotiating with Trump leaves the government ill-equipped to prepare British taxpayers for further tax increases or spending cuts in November, when one or both are essentially guaranteed to follow in this year’s Budget. Equally important, it means that no one is asking whether the British government might be better off holding fire to get a deal that includes relief for pharmaceuticals, or if the government’s changes to the “non-dom” tax regime should be rethought now that so many affluent Americans are looking to escape Trump’s America.

Students aged 16-19 are invited to enter FT Schools’ blog competition in partnership with the Political Studies Association and ShoutOut UK by May 25. The winner and two runners up, if UK based, get to go along to a “Have I got fake news for you” parliament event in which I am a panellist. Details here.

Now try this

I’m off to the pictures to see Sinners. However you spend it, have a wonderful weekend!

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