US Trade Deal Delays Frustrate UK, EU, and Asia

US Trade Deal Delays Spark Global Frustration

British Prime Minister Rishi Sunak, while at a Jaguar Land Rover factory in May, announced a landmark trade deal with then-US President Donald Trump that included slashing US tariffs on British steel to zero. Yet, more than three months later, Peter Brennan, trade and economics policy lead at trade body UK Steel, is still waiting for that promise to become reality.

Brennan indicates that uncertainty over the 25% US import tariffs is causing a drop in US orders for most member businesses. He added that one manufacturer of highly price-competitive products said they might have to close by the end of the year if tariffs aren’t reduced to zero.

“There is growing concern that finalizing the fine print of the steel deal is no longer a priority for the UK and US governments,” Brennan said last week. “The willingness on both sides to get this deal done appears to be waning.”

A Wider Picture of Frustration

Similar frustration and economic loss are rippling through Japan, the EU and South Korea. Those three have also announced similar news in the past month: while negotiating comprehensive tariff levels that went into effect Aug. 7, Washington offered them reprieves regarding auto exports.

But for those three auto-export powerhouses (which, unlike the UK, face 50% tariffs on steel and aluminum), they are still awaiting concessions from the Trump administration, and punitive tariffs as high as 25% on auto imports such as Toyota, BMW and Hyundai that the U.S. levies on national security grounds remain.

“We are still continuously being damaged — the bleeding hasn’t stopped, and we hope that the U.S. will sign an executive order as soon as possible,” said Japan’s chief trade negotiator Akira Akasawa, referring to the country's auto industry.

Permanent Negotiations?

Three weeks ago, European Commission President Ursula von der Leyen agreed with Trump in Scotland on what she called a 15% “all-in” tariff, which officials in Brussels later understood should be a cap on tariffs that also applies to autos.

The German Association of the Automotive Industry (VDA), which represents the German auto industry, is urging rapid implementation to alleviate the “massive burden” on manufacturers and their suppliers.

It is worth noting in this context that ongoing trade tensions significantly affect global supply chains, adding to market uncertainty.

Any delays might be purely procedural. But “if nothing happens, the EU Commission will be under enormous pressure to take retaliatory or other action, especially from car manufacturers in Germany, Italy, France, Sweden,” said Cecilia Malmström, former EU trade commissioner and now a non-resident fellow at the Peterson Institute for International Economics. “There’s still a lot of vagueness in the U.S.-EU agreement, and also in the other agreements, so we will most likely see permanent negotiations and a lot of delaying tactics.”

At an Aug. 14 press conference, EU Commission spokesperson Olof Gill stated that Washington and Brussels are finalizing a joint statement. “The U.S. has given us political commitments on this, and we expect these commitments to be delivered,” he said.

Uncertainty in Japan and South Korea

Less than a week before the EU announcement, the U.S. and Japan reached a surprise agreement July 22 to cut comprehensive and auto tariffs to 15%. Thus far, the broader tariffs have gone into effect, but the add-on duty for autos remains at 25%.

Officials in Asia’s second-largest economy are awaiting Trump’s issuance of an executive order to lower auto duties, and an official directive to clarify that comprehensive tariffs won’t be levied on top of existing rates.

Akasawa has cited that one Japanese automaker is losing 100 million yen (about $680,000 USD) an hour because of the tariff issue.

Last month, Nissan Motor Co. said it expects the lower tariff rates to have a 300 billion yen impact, down from an earlier estimate of 450 billion yen. But its CEO, Ivan Espinosa, cautioned that until it’s clear when and how the tariffs will go into effect, it's hard to provide an accurate forecast.

Akasawa flew to the U.S. earlier this month to confirm the U.S. side would soon amend its executive order to eliminate layered taxes and refund tariffs that were over-collected. Neither of those has materialized so far.

Facing a similar issue is South Korea, which announced July 31 a trade deal with Washington. The deal will impose a 15% tariff on goods exported to the U.S., including autos, while South Korea pledged $350 billion USD in shipbuilding investment and $100 billion USD of energy purchases.

The 15% comprehensive tariff went into effect earlier this month per Trump’s order, but as with Japan, the duties for the auto industry remain at 25%. Trade data show that even though South Korean companies shipped goods early in anticipation of higher U.S. tariffs, which kept overall exports resilient in the first half of the year, auto exports to the U.S. dropped nearly 17%, and steel exports declined more than 11%.

Even under the new 15% auto tariff, South Korea’s largest automaker Hyundai Motor Co. and affiliate Kia Corp. could still face as much as $5 billion USD in extra costs this year, according to Bloomberg Intelligence analyst Joanna Chen. Chen said that while avoiding the 25% tariff would save over $3 billion USD, this tariff still squeezed margins and added to competition with Japanese automakers amid weaker demand and tighter subsidies.

This situation reflects the increasing complexities in global trade relations, where geopolitical interests intertwine with economic considerations.

South Korean President Lee Jae-myung is scheduled to hold a summit with Trump on Aug. 25 — his first since taking office in June — which will test the durability of the $350 billion USD investment pledge, and the countries’ alliance on sensitive issues such as defense spending, U.S. troop levels and policies toward North Korea.

US Already Overwhelmed

For Sunak and the UK, most of the deal is now in effect, including the so-called reciprocal tariff rate of 10%, the lowest of all U.S. trading partners. Yet, amid the delays in tariff cuts, Trump’s 25% duties on British steel remain an irritant.

One sticking point is that the U.S. insists steel must be “melted and poured” in the UK to be eligible for relief. That’s a requirement Tata Steel UK, one of the country’s largest producers, can no longer meet after closing its blast furnaces last year, and its new electric arc furnaces aren’t expected to be ready until the end of 2027.

People familiar with the government’s thinking are cautiously optimistic they may be able to obtain an exemption to the “melted and poured” rule, allowing steel imported from certain European countries and then further processed in the UK to qualify as a UK product.

“It’s not for lack of effort on the part of the UK government,” said Tim Rutter, public affairs director at Tata Steel. “We hear it’s just that the U.S. administrations are overwhelmed.”

A spokesperson for the UK’s Department for Business and Trade said officials will continue to work with Washington to implement the deal as soon as possible.

Late Friday in Washington, U.S. Customs and Border Protection published new lists of tariffs on steel and aluminum products that went into effect on Monday of this week, with some guidance affecting imports from the UK.

Akira Akasawa of Japan acknowledged that even the deal with the UK took 54 days for its key parts to actually be implemented. Therefore, he said it would be “good” if the U.S. executive order were issued by around mid-September.

Said Sam Lowe, a partner at Flint Global and head of the firm’s trade and market access practice:

“This is just further confirmation that negotiations are never really over, especially as the U.S. is set to impose more tariffs on industries such as pharmaceuticals and semiconductors.”