A few more details emerge on UK's US and Indian trade deals – UK tariff on US goods down from 5.1% to 1.8% - tariff on UK goods to the US up from 3.4% to 10% - 500,000 Indians and families tax free?
The Art of the Deal!
From here:
BBC Breakfast viewers erupt after Naga Munchetty skewers Labour MP in humiliating blow
Figures compiled by the BBC, whose ability to do simple arithmetic has to be questioned!
Assuming the zero-rated tariffs on Rolls-Royce parts and engines (for Boeing et al) and a maximum rate of 10, the overall average tariff rate has to be below 10%.
Perhaps the deal was an improvement on the UK’s position dictated by Trump in the “new era”.
From Grok:
“In 2024, the UK’s trade with the USA, expressed in sterling, was as follows:
Goods Imports: £57.1 billion
Goods Exports: £59.3 billion
Services Imports: £61.2 billion
Services Exports: £137.0 billion
Total Imports: £57.1 billion (goods) + £61.2 billion (services) = £118.3 billion
Total Exports: £59.3 billion (goods) + £137.0 billion (services) = £196.3 billion
These figures reflect a trade surplus for the UK with the USA, driven largely by services exports.”
The UK runs a sizeable surplus in “Services” and is roughly in balance on goods.
Using the BBC’s numbers for the “Goods” component only, the 8.2% US tariff advantage (10% -1.8%) implies tariffs charged on UK exports to the US of £5.9 billion v the tariff charged to US imports to the UK is around a billion pounds.
Net cost to the UK – assuming the tariffs apply to just goods and not services - £4.9 billion.
The UK has previously refused the import of US beef – because of hormone injections that the EU imposed. That ban may still be in place.
Another EU imposed “tariff” is Digital Services Tax. From Brave AI:
“The DST was introduced on April 1, 2020, imposing a 2% tax on revenues from social media platforms, internet search engines, and online marketplaces that derive value from UK users.
It applies to companies with global revenues exceeding £500 million and UK revenues above £25 million.]
In its first year, the DST generated approximately £360 million, mainly from US technology companies.
The UK government plans to review the DST in 2025 to ensure it aligns with both its revenue needs and the evolving digital economy.
The recent trade deal between the UK and US does not include any changes to the DST, despite initial speculation that the UK might lower it for US firms.
Instead, the two nations have agreed to work on a digital trade deal that could potentially open the doors to a future UK-US technology partnership.”
No deal on DST announced yet!
The UK also announced a trade deal with India – exempting Indian companies from the UK’s draconian National Insurance taxes on employers and employees 3 years – sold as standard reciprocity in trade deals – but - India does not have a National Insurance – it’s all private.
There could be 100’s of thousands of Indian workers flooding into the UK, compe5ing with UK workers saddled with 15% employer taxes above £5,000 and employee National Insurance of 8%, per Brave AI:
“The UK employee National Insurance rate for the 2025-2026 tax year is 8% on earnings between £242.01 and £967 a week, and 2% on earnings above £967 a week.”
23% marginal raxes saved on start-up Indian companies.
Workers will bring their extended families also. There could be half a million workers and 2 million family members – all “legal”.
From Grok:
“2024 sterling value of UK imports and exports with the US
In 2024, the UK’s trade with the USA, expressed in sterling, was as follows:
Goods Imports: £57.1 billion Goods Exports: £59.3 billion Services Imports: £61.2 billion Services Exports: £137.0 billion Total Imports: £57.1 billion (goods) + £61.2 billion (services) = £118.3 billion
Total Exports: £59.3 billion (goods) + £137.0 billion (services) = £196.3 billion
These figures reflect a trade surplus for the UK with the USA, driven largely by services exports.
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2024 sterling value of exports and imports with India
In 2024, the UK’s trade with India, expressed in sterling, was as follows:
Total Trade: £42.6 billion
Goods Imports: £17.2 billion Goods Exports: £7.8 billion
Services Imports: £8.3 billion Services Exports: £9.7 billion
Total Imports: £17.2 billion (goods) + £8.3 billion (services) = £25.5 billion
Total Exports: £7.8 billion (goods) + £9.7 billion (services) = £17.5 billion
This results in a trade deficit of approximately £8.1 billion for the UK with India.”
A £10 billion goods deficit and around a £1 billion services surplus.
Indian companies attracted by trade deal may supply the UK market but may also import gods for sale in the UK – the impact on public services in the UK will be a drain on an already strained UK infrastructure and on energy demand.
The UK needs to export people to reduce these strains – not import more.
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Onwards!!!