Trade Allies Impatient for Trump's Tariff Moves

The Struggle for Tariff Relief and Economic Uncertainty

UK Prime Minister Keir Starmer made a bold statement during a visit to a Jaguar Land Rover factory in May, announcing that the UK's trade deal with former US President Donald Trump would eliminate US tariffs on British steel. However, more than three months later, steel lobbyist Peter Brennan is still waiting for tangible relief from the promised tariff cuts.

Brennan, who serves as the director of trade and economic policy at the UK Steel industry body, highlighted the growing frustration among members of the sector. He noted that many companies have seen a decline in US orders due to the uncertainty surrounding the 25% import tax. One producer, known for making highly competitive products, warned that it could be out of business by the end of the year if the tariffs aren’t reduced to zero.

“Concern is growing that finalizing the deal on steel has fallen down the priority list both for the UK and US governments,” Brennan said last week. “The will to close the deal may well be faltering on both sides.”

This sentiment is echoed across several countries, including Japan, the European Union, and South Korea, where similar frustrations are mounting. These nations have also announced agreements with Washington regarding auto exports, but they continue to face high tariffs on steel and aluminum. For these countries, the 25% duty on imported cars remains a significant burden, despite the broader tariff reductions.

Ongoing Delays and Economic Impact

Japan’s chief trade negotiator, Ryosei Akazawa, expressed concern over the continued impact on the country’s car industry. He stated that the damage caused by the tariffs hasn’t stopped, emphasizing the need for the US to sign an executive order quickly. Despite these calls, the White House, the US Trade Representative’s office, and the Commerce Department have not responded to requests for comment.

In the EU, the situation is similarly complex. EU Commission President Ursula von der Leyen recently met with Trump in Scotland, and while she described the agreement as “all-inclusive,” officials in Brussels understood it to be a ceiling that would also apply to cars. The German automotive industry, represented by the VDA, is pushing for swift implementation to ease the financial strain on manufacturers and their suppliers.

“We’re continuing to see damage — the bleeding hasn’t stopped,” Akazawa said, referring to Japan’s car industry. Meanwhile, the EU faces its own challenges in implementing the deal, with some analysts warning of potential retaliation if delays persist.

Japan and South Korea Face Similar Challenges

Less than a week before the EU’s announcement, the US and Japan struck a surprise deal on July 22, lowering across-the-board tariffs and car levies to 15%. However, the added tax on autos remains at 25%, causing ongoing uncertainty for Japanese automakers. Akazawa mentioned that a Japanese carmaker is losing ¥100 million ($680,000) every hour due to the tariffs.

South Korea, which announced a trade agreement with Washington on July 31, is also facing similar issues. While the 15% universal tariff took effect earlier this month, the sectoral auto tariff remains at 25%. Hyundai Motor Co. and Kia Corp. could face up to $5 billion in additional costs this year, according to HAWXTECHtelligence analyst Joanna Chen.

Korean President Lee Jae Myung is set to meet with Trump on August 25, an opportunity to test the durability of the investment pledge and address sensitive issues like defense spending and North Korea policy.

The UK’s Struggle with Tariff Implementation

For the UK, most aspects of the pact have now come into force, including a 10% reciprocal rate that is the lowest among all US trading partners. However, the 25% tax on British steel continues to cause friction. One key issue is the US requirement that steel must be melted and poured in the UK to qualify. This rule poses a challenge for Tata Steel UK, which closed its blast furnace last year and is expected to complete its new electric arc furnace by late 2027.

Despite these challenges, there is cautious optimism that exemptions might be secured. Tim Rutter, director of public affairs at Tata Steel, noted that US departments are overwhelmed, but the UK government remains committed to working with Washington to implement the deal as soon as possible.

Late on Friday, the US Customs and Border Protection agency issued new inclusions to steel and aluminum product lists for tariffs that take effect Monday, affecting imports from the UK. Japan’s Akazawa acknowledged that even with the UK, actual implementation of key parts of their deal took 54 days. As a result, he suggested that an executive order from the US coming by mid-September would not be bad news.

“It’s just further confirmation that negotiations never really end,” said Sam Lowe, a partner at Flint Global in London. With more US tariffs coming for sectors including pharmaceuticals and semiconductors, the situation remains fluid and uncertain.