Today’s trade news includes continued US investment into UK tech, after US President Donald Trump arrived in London for his state visit last night, although plans to further reduce steel tariffs appear to have cooled.
Elsewhere, there’s an update on the parameters of possible UK participation in the EU’s flagship defence funding programme, while EU relations minister Nick Thomas-Symonds spoke in Brussels yesterday.
Trump touches down
Trump flew into the UK yesterday, with further US tech investment – and plenty of UK protest – not far behind.
After a steady trickle of announcements on US nuclear and tech partnerships, reports surfaced this morning that the cumulative value of money contributed by US firms like Nvidia, Microsoft, Open AI and Google will total £31bn.
Microsoft’s CEO Satya Nadella claimed that the £22bn the company is investing in the UK will spur growth. He told the BBC that “whenever anyone gets excited about AI, I want to see it ultimately in the economic growth and the GDP growth”, and said the investments could be made over five years, rather than the proposed 10.
Steel deal off
There’s less good news for the UK’s steel sector though, as negotiations to reduce the 25% US tariff to zero were abandoned in the hours before Trump’s arrival, the Guardian reports.
‘Rest of world’ steel faces a 50% US tariff rate, but when US-UK Economic Prosperity Deal was agreed in May, it was claimed by Downing Street that a move from the UK’s 25% to a zero-tariff rating would be confirmed in the coming months.
The government said that industry now has “certainty” to plan moving forwards, which was echoed by UK Steel director general Gareth Stace, who struck a conciliatory tone when he said that, while “disappointing”, the lower rate nonetheless offers “competitive advantage”.
“If the US was never offering that deal, then the final decision on 25% offers a degree of certainty and potentially a competitive advantage, so long as other countries remain at 50%.”
The British Chambers of Commerce was more critical, with head of trade policy William Bain saying that the 25% rate “will still negatively impact jobs and livelihoods across the country”.
Safe ceiling
A new hard limit on UK contributions to the EU’s €150bn defence spending programme, Security Action for Europe (Safe), could be introduced.
Diplomats speaking to the Guardian said French officials had proposed a 50% cap on the value of UK components included in projects commissioned with Safe funding.
The funding makes loans available to member states to increase their defensive capacity, as part of a total €800bn package agreed at the start of the year in light of Russia’s sustained threat to European security.
In Brussels, a French spokesperson said:
“We support the European commission in its efforts to establish the parameters for the UK’s association with Safe.
“The basis for this is provided by the Safe regulation, which stipulates among other principles that some of the components must come from the EU’s industry.”
This follows news in July that the UK will need to repay a portion of the money it makes through contributions to Safe-funded projects, as Brussels should be recompensed for creating jobs and contributing to UK GDP.
Improving UK-EU relations have helped secure a higher ceiling for British defence components. The EU-UK security and defence partnership, signed in May after the’ Leaders’ Summit in London, increased the limit from 35% to 50%.
Nick Thomas-Symonds in Brussels
On the theme of UK-EU cooperation, EU relations minister Nick Thomas-Symonds was in Brussels yesterday to advance post-summit talks on trade.
Speaking at the College of Europe, he spoke warmly of cultural exchange between the UK and continental Europe, adding that its “history of partnership and trade” is also “the future of Europe”.
Looking ahead to EU-UK talks and alluding to intentions for the 2026 reopening of the Trade and Cooperation Agreement, he said that the UK is “doing away with the status quo, frankly because it just didn’t work as well as it could”.
“It was the only trade deal that made trade with our biggest trading partner harder.”
You can read the full speech here and you can read the Chartered Institute’s new report on what the future UK-EU relationship should look like, here.
Other news today
- UK inflation remains at 3.8%, however food prices continue to rise more steeply, with rates for food and non-alcoholic drinks at 5.1%
- Although US tech money is flowing into the UK, pharmaceutical investment is leaving, as the BBC reports that market-leading firm GSK will invest £22bn in the US over the next five years
Yesterday in trade
- The 19th round of EU sanctions on Russia was delayed
- Chartered Institute director general, Marco Forgione, gave his take on what US investment means for the UK
You can read more here.
