U.S.-U.K. Trade Agreement and Implications for Asia

There is probably a sigh of relief in the White House with the announcement of the first trade deal concluded during the 90-day tariff pause period. The Trump administration will point to this deal as evidence that their tariff policy is working. Depending on what’s actually in the deal, this may add momentum to negotiations underway with other Asian partners. Most importantly, this announcement comes before the weekend meeting between the U.S. and China. 
However, the U.K. is a unique position, with virtually balanced trade with the U.S. and significant progress made under Trump 1.0 towards an FTA.
While the President is referring to this deal as “full and comprehensive,” reports coming out from London suggest a more limited and modest agreement.   
The U.S.-U.K. deal reportedly keeps in place the 10 percent universal tariff, but notably offers the U.K. some relief under the automotive, steel, and aluminum tariffs.
If this is the case, that will embolden other partners, particularly Japan and Korea, to also insist on favorable treatment under the sectoral tariff regime.The U.K. has also agreed to lower some tariffs and eliminate some non-tariff measures, including its digital services tax.
What still remains unclear is whether the U.K. also agreed to provisions to address the China challenge, including transshipment and investment restrictions.
All eyes will be on which partner may be next. Multiple negotiations are underway, with some making more progress than others. Our partners will scrutinize the U.S.-U.K. deal to get a better sense of what it might take to get the U.S. to reduce the tariffs. 

(Wendy Cutler is an American diplomat currently serving as Vice President of the Asia Society Policy Institute)