Following the news earlier in the week that the US is suspending £31bn of pledged investment in the UK, concerns are growing among ministers, MPs and trade policy experts that the Trump administration will not stick to its word on other agreements.

Also today, there are concerns about higher costs for UK steelmakers next year and the automotive industry is pushing back against the EU’s new proposals on emissions targets.

Trump deals ‘built on sand’

Earlier this week, it was reported that the White House is suspending its £31bn Tech Prosperity Deal with the UK due to frustration with British trade barriers, including the digital services tax and sanitary controls on agricultural imports.

Today, the Guardian reports concern in Westminster that the Trump administration could renege on other agreements it has struck with Sir Keir Starmer’s government.

This includes the Economic Prosperity Agreement that was struck in May to reduce the worst of the US’ reciprocal tariffs that were introduced on ‘Liberation Day’ in April, and a more recent deal on pharmaceuticals trade.

One minister privately told the Guardian that these agreements were “built on sand” and that unpredictability was a “new normal now in our relationship across the pond”.

Liam Byrne, the chair of the business and trade select committee, said government needed to ensure they could get the tech investment deal “back on track” while Layla Moran, chair of the health select committee, said it was “surprising” that the UK government had a “naïve belief” in Trump being a “good faith actor”.

“The NHS is too precious to be gambled with and the concern now is whether the deal that could already cost the UK taxpayer billions could end up costing a lot more if it collapses in chaos,” she said.

David Henig, a trade policy expert, said:

“There is a serious risk that the UK government has made commitments to raise drug prices in return for nothing more than a verbal promise from President Trump around zero tariffs, when we know he has form for not honouring his word.

“The role of private companies in possibly working with the US administration to coerce the UK government by threatening to withdraw investments is also a big worry. None of this is normal in international trade policy and the government needs to explain both this deal and how such things will be avoided in the future.”

Government officials defended the UK’s deals with the US. While they admitted that the tech investment deal was “quite abstract” and that uncertainty now shaped the US relationship, they also said the UK had secured tangible outcomes in other areas, including steel.

“The fact we have 25% steel tariffs, and that’s better than the rest of the world, is not flimsy; the same thing with our auto rate,” one official said. “We are in a more competitive position than other major economies.”

Steel braces for new EU costs

Despite the preferential terms with the US, the UK steel industry expects to be “irreversibly and profoundly harmed” by new US tariffs, as well as new levies being imposed by the EU.

The EU is set to introduce 50% duties on UK steel exports to the bloc from the start of 2026, while carbon levies are also set to begin under the EU’s Carbon Border Adjustment Mechanism (CBAM).

“The EU CBAM creates barriers to UK steel exports to Europe and piles additional costs and admin onto our steelmakers at a time when global trade is increasingly turbulent,” Frank Aaskov, UK Steel’s director for energy and climate change policy, told Politico.

Aaskov also highlighted that steel exports from other parts of the world could be diverted to the UK from Europe because of new CBAM costs, with the UK’s own CBAM not due to come into effect until 2027. He argued that this could be “worse” than the CBAM charge on UK exports, with the UK market risking being flooded with cheap imports.

Prime minister Starmer has said his government will give “strong support” to UK steel and that his government is “in discussions” with Brussels.

In May this year, the UK and EU also committed to linking emissions systems to remove new carbon charges for UK businesses. London and Brussels yesterday issued a joint statement pledging to complete negotiations on this work in time for a currently unscheduled summit next year.

EU EV rollback has unintended consequences

Brussels would have hoped for a positive response from the automotive sector to its decision this week to ease 2035 emissions targets. However, having looked at the details of the new plans, senior industry figures have called the changes “disastrous”.

Under the new plans, firms can continue releasing 10% of their 2021 emissions and can continue to sell some petrol engines and hybrids, but these emissions must be offset by using low-carbon steel, ‘made in Europe’ content and sustainable fuels.

These offsets have been described as too complex and expensive, with car giant Stellantis saying the new proposals “will not support the production of affordable vehicles for the vast majority of customers”.

“In times when European economic strength is crucial, this entire package from Brussels is disastrous,” said Hildegard Müller, president of the German car lobby VDA, to the FT.

“What appears to be greater openness is fraught with so many obstacles that it risks remaining ineffective in practice.” 

Export control notice

The Export Control Joint Unit has issued a Notice to Exporters indicating that updates have been made to “general trade licence Russia sanctions – financial services and funds related to fertilisers”.

Anhydrous ammonia now falls within the scope of the licence.

Also in the trade news today

• In better news for UK steel, the government has announced £22m in extra support for Port Talbot steelworkers and businesses
• Kemi Badenoch’s Conservative Party is pledging to create a £50bn defence package by diverting what she calls “nonsense” green funds, the Telegraph reports
• The UK has appointed Amy Barklam as its new Trade Commissioner for Latin America & the Caribbean (LATAC)

Yesterday in trade

• HMRC announced that Netcompany will deliver the next phase of the Trader Support Service for trade between Great Britain and Northern Ireland, with the Chartered Institute set to continue contributing specialist expertise to the service
• The UK confirmed its return to the EU’s Erasmus+ scheme for international students
• The EU expanded its CBAM scheme to cover washing machines and imported car parts

You can read all of yesterday’s trade news here.