When the push comes to push, the question of whether the British industry faces paralyzing prices on exports to the United States or enjoys a unique opportunity to grow can return to three apparently random words: “Made and poured”.
To see why, let’s start by summarizing where we are currently in the soap of American trade policy.
Donald Trump has just doubled the additional rates billed on imports of steel and aluminum in the United States from 25% to 50%. Essentially, this would transform a painfully high price into something closer to an insurmountable economic wall (remember during the Cold War, the iron curtain is equivalent to an effective rate of just under 50%).
Be that as it may, the good news for British steel producers is that they have been spared the rate of 50% and will only have that the rate of 25%.
But there is a bite in the tail: this stay of the execution will not last until July 9 – on the basis of President Trump’s most recent statements.
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For all those who follow these events around their eyes, it might seem a little strange. After all, I don’t have sir Keir Starmer Announce only a few weeks ago that British Steel and aluminum manufacturers may not take advantage of prices not 25% but 0% with America, thanks to its Bold trade agreement with the United States? Well, yes. But the Prime Minister was not entirely clear about what it meant in practice.
Because the reality is that each trade agreement works more or less as follows: politicians negotiate a “terms of terms” agreement – a vague set of principles and red lines. He then followed a period of horse business and negotiation to nail the real details and transform it into a black and white right.
In this case, when the Prime Minister and the President made their big announcement 28 days ago, they had agreed “chiefs of terms”. The little impression was not yet over.
Currently, we are still in the exchange of horses. Negotiators in the United Kingdom and the United States meet regularly to try to nail the little impression. And this process takes more time than many had planned it. To see why, it is worth doing a little in detail.
The trade agreement is committed to allowing certain cars to spend in the United States at a rate of 10% and to protect certain pharmaceutical businesses, as well as to allow steel and aluminum in the United States at a zero rate rate.
Regarding cars, there are nuances on the type of cars that the agreement covers. Something similar applies to pharmaceutical products. Things get even more especially when you perceive the details of the steel.
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You see, one of the things that the White House is nervous is the prospect that Great Britain could become a kind of assembly point for the steel of other countries of the world-which you could simply send steel to Great Britain, have it pressed or ride or work, then sent to the United States with these 0%prices. Thus, American negotiators insist that only steel “melted and poured” in the United Kingdom (in other words, melted in a furnace) is covered by the trade agreement.
It’s good for some producers but not for others. One of the largest British steel exporters is Tata Steel, which is a lot of steel that is transformed into cans in tin that you find on American supermarket shelves (not to mention the piping used by oil trade). Until recently, this steel was indeed “melted and poured” from the high stoves of Port Talbot.
But Tata closed these stoves last yearintended to replace them with cleaner electric arc ovens. And in the intermediate period, it is rather important to raw steel from the Netherlands and India, then makes it pass through its factories.
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Or consider the situation to British Steel. There, in Scunthorpe, they melt and pour the steel from iron made in their high stoves – but are now thinking about this. Although the company was semi-nationalized by the government, it is still technically a Chinese company, owned by Jingye. In other words, his steel could technically count as benefiting China – This is something that the White House is even more sensitive.
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Do you see how much this suddenly becomes a little more complicated than it could have had before? This helps to explain why negotiations take more time than expected.
But that brings us to the big problem. The White House indicated that Great Britain will only be spared this 50% tariff rate provided that the trade agreement is finalized on July 9. This gives negotiators another month and a little. This may seem a lot, but now consider that it would be one of the fastest completion of completion announcements ever in all trade negotiations in modern history.
There is no guarantee that Great Britain will obtain this offer in time for this deadline – although the initiates tell me that they think they could be able to finalize it in a fragmentary manner: the cars of a week, steel another, from pharmaceuticals another. Anyway, the heat is on. Just when you thought that Great Britain was in the safe area, it stands again on the edge of danger.