Comparing the UK, Japanese & EU deals with the U.S.

As I mentioned on LinkedIn way back when the UK-U.S. struck their Economic Prosperity Deal in May, the deal could not properly be judged until the U.S. had struck deals with other countries.  

Now, we're maybe finally in such a position. 

Firstly, a disclaimer that doing a full comparison is impossible.  When you’re relying on press releases, have negotiations ongoing, and conflicting details from opposite camps, there is no way that an in-depth comparison can be done.  That being said, let’s get in to it. 

Is 10% or 15% better?  Not as easy to answer as it sounds 

As is now well known, the UK agreed a reciprocal tariff rate of 10% for the vast majority of goods.  In comparison, both Japan and the EU have announced a rate of 15%.  

So, did the UK get a better deal? Not necessarily. 

The UK’s 10% is subject to stacking of tariffs while both Japan and EU are reporting that their rate of 15% is a flat-rate.  So, as an example, if you are a UK business who exports fishing rods to the U.S., you will be subjected to a MFN rate of 6% PLUS 10% reciprocal rate.  In comparison, it seems that an EU origin fishing rod will be subject to 15% duty rate only.   

What is the position with cars? 

Again, starting with the UK position, UK manufacturers can access a 10% tariff rate. But, and it is a relatively big but, only within the quota which is currently 100,000 (roughly what we exported to the U.S. in 2024).  

Whereas, the number of car exports dwarfs the UK number for both the EU and Japan.  A quota of 100,000 would simply not suffice.  However, interestingly, both countries are subjected to no quota at all and will be subjected to a tariff rate of 15% for all cars exports.  

For the first 100,000 exports to the U.S., the UK is clearly in a stronger position.  The question marks rise if UK manufacturers look to grow their exports to America.  Can the UK go back to negotiate a rise in the quota? 

Pharmaceuticals 

The reason for mentioning pharmaceuticals is because of the confusion which is coming from the EU fact sheet outlining the deal.  From what the EU have released, it reads that they have agreed a 15% tariff will apply to pharmaceuticals even once President Trump announces the applicable tariff rate on the back of the Section 232 investigation.  

If this is true, it could be a huge win for the EU.  The U.S. President has been quoted as suggesting a tariff rate as high as 200% could be introduced (whether from Day 1 or over an incremental period). 

From a UK perspective, the Economic Prosperity Deal stated that the issue of pharmaceuticals will be discussed at a later date so, right now, we have no way of judging where the UK will end up.  

Conclusion – A lot of confusion 

So, after nearly 500 words, the answer is still the same as it was in the introduction.  Simply put, you just still cannot compare and judge the different agreements. As said, negotiations are still ongoing and you’ll end up with conflicting information if you compare different press releases.  

Right now, every side wants to make it sound like a win which is normal but, without concrete official evidence, makes it a nightmare to judge and compare.  

Confusion is still out there; there are a lot of ‘ifs’ and ‘buts’, basically we’ll just have to wait and see.