Bassanese Bites: Much ado about nothing – May 12 2025
Global markets
Global stocks pulled back last week after several weeks of strong gains. Some impatience is emerging around the timing of US trade deals.
US-UK trade deal
Global markets opened last week on a nervous note. Reports suggested that US President Trump will personally set tariff levels. This means negotiations with trade partners may not be as important.
By mid-week, the US and UK unveiled a bare-bones trade deal that may hint at what future agreements will look like:
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Both sides slightly eased restrictions on beef exports, but the UK upheld its ban on hormone-treated meat.
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UK car exports will face a 10% tariff on the first 100,000 vehicles – matching current export volumes – instead of the higher 27.5% rate.
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Steel and aluminium exports will avoid the 25% tariff, although the exact product coverage remains unclear.
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Rolls-Royce engines and aircraft parts will be exempt from tariffs.
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Talks on pharmaceuticals and digital services made no progress. The UK will continue applying its 2% digital services tax on revenue earned from UK users by US tech firms like Meta, Alphabet and Apple.
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Most other UK exports will now incur the 10% tariff Trump introduced in early April.
All up, the deal is very limited in nature and the US will still impose the minimum 10% tariff on most UK exports.
It also suggests that the likely outcome of all these trade deals may be a minimum 10% tariff on most imports into the US, although there may be country and sector-specific special deals. If so, the US would still see a major rise in tariffs and a more complex trade landscape.
Other global news of note
Media reports highlighted progress in US-China trade talks. This has, understandably, got markets excited this morning.
