This week in trade has seen a challenging week for Number 10 as both plans for a relationship ‘reset’ with Europe and for a boost in defence spending faced major setbacks.
There were also mixed signals on renewing the US-Mexico-Canada Agreement (USMCA) from US President Donald Trump, while trade experts discussed AI adoption in customs and supply chains.
The big picture: A challenging week for the government that featured several trade-related setbacks.
The set piece summit for the UK-EU reset, which the government has positioned as a cornerstone of its growth strategy, appears increasingly in doubt.
Earlier this week, iNews reported that the ongoing political uncertainty surround Sir Keir Starmer’s premiership was giving Brussels pause about the upcoming summit, originally slated for early summer and already delayed once.
While Politico reported that an EU-UK the youth mobility scheme – one of the three agreements set to be announced at the summit – was at risk due to objections from several member states to granting British visas.
Further challenging Number 10, defence secretary John Healey, a Starmer loyalist, resigned from the cabinet, along with armed forces minister and rumoured leadership contender Al Carns, over the Treasury’s settlement for the Defence Investment Plan (CIP).
While praising the prime minister and cross-government work on defence, Healey said the Treasury’s “unwilling to commit the resources that the nation needs” necessitated his resignation, while Carns said the proposed plan was “not transformative enough” and warned that the UK could find itself in a difficult position in “the next two to three years should we be tested.”
Starmer said he was “proud of our record on funding” in a letter sent to Healey yesterday, while chancellor Rachel Reeves said she’ll do what’s needed to “keep the country safe”.
Dan Jarvis has stepped into the role of defence secretary. Jarvis, a Dan Jarvis has stepped into the role of Defence Secretary. The former South Yorkshire mayor, rose to the rank of major in the Parachute Regiment in a military career than saw him deployed in Northern Ireland, Kosovo, Sierra Leone, Iraq and Afghanistan.
Good week/bad week: Success for British industry. After petitioning the government to reconsider upcoming changes to its steel tariff regime, the Guardian reports ministers are set to revise the changes – scheduled for implementation on 1 July.
The UK has been set to reduce its quota of tariff-free steel imports by 60%, with tariffs on goods imported above that quota facing a duty increase of 50%.
However, following warnings that the UK industry won’t be able to satisfy all its steel needs domestically, with downstream manufacturers warning of the financial harm posed by expensive imports, reports suggest the government will issue a reprieve to industry.
A three-month “transition period”, during which firms won’t need to pay import duties, could be extended to 12 months. Alternatively, it’s been suggested that some sectors could be exempted from the measures.
A setback for negotiations of USMCA, which is up for renewal this year. The three countries can either decide to renew for 16 years, or must commit to annual reviews.
US President Donald Trump dismissed the negotiations, claiming on Wednesday (10 June) “we don’t need anything that Canada has, we don’t need anything that Mexico has”, and adding that he’s not looking to renew the deal.
US ambassador to Canada, Pete Hoekstra, countered that statement yesterday, telling an audience at a US-Canada summit in Toronto:
“When the president says we don’t need this from Canada, or there’s nothing we need. America has a tremendous amount of things where we have a need.”
He singled out potash – a chemical that improves the performance of other fertilisers – as one thing the US needs from Canada, which is the world’s biggest supplier of the commodity.
Earlier this week, we reported pro-USMCA sentiment from senior Mexican and Canadian representatives, with Mexico’s economy minister, Marcelo Ebrard, saying his country “would like it to be extended to 16 years”.
There had also been optimistic talk of soft-power diplomacy through the FIFA World Cup, as the three countries began hosting duties yesterday (11 June). Canada’s sports minister Adam van Koeverden suggested the tournament could be a springboard for trade cooperation.
“We see this as a great opportunity to bring not just our world together globally, but also Canada, Mexico and the US on a trilateral basis as we renegotiate our trade terms.”
How’s stat? 2.5%. That’s the World Bank’s revised global growth estimate for 2026, a lowering of its previous estimate as a result of ongoing conflict in the Middle East.
Two thirds of countries covered in the forecast had their growth prospects reduced, with the biggest cuts impacting nations in the Middle East, including the UAE and Iraq, whose exports have been hit by the disruption.
Quote of the week: “The Chartered Institute will be working with members and the trading community... to support the UK government argue against the imposition of these tariffs.”
Director general Marco Forgione’s statement on the Section 301 US tariffs, which provide a legal basis for applying a 10% duty to UK exports.
The week in customs: Digital trade experts discussed the challenges and pitfalls of AI adoption in this month’s Global Trade Live webinar.
They suggested that human oversight is still fundamental to both ensuring accurate work, as well as getting the most out of the technology.
University of Warwick associate professor Dr Awinder Kaur, associate professor explained AI isn’t just about “saving time”.
“It's about giving trade professionals more capacity to make more complex decisions where human expertise, judgment and experience make such a big difference.”
You can watch the full webinar here.
What else we covered: The week’s Trade Digest addressed North America, with more detail on USMCA negotiations and further insight into the latest US tariffs.
We heard from FT journalist Soumaya Keynes and economist Chad Bown on how the West can better address trade imbalances with China, as they promoted their book ‘How to Win a Trade War’.
In the Member Spotlight this week, Arconic trade compliance manager Katarzyna Ziolkowska-Smith, who discussed the trade challenges facing the aluminium and steel sectors.
True facts: The UK is importing twice as much chicken (by value) as it was five years ago, with farmers raising concerns about unfair competition from countries with lower welfare standards.
The FT reports that chicken imports rose from £823.7m in 2020 to £1.78bn last year.
However, with exports originating from non-EU countries including Thailand, Brazil and Ukraine, producers have warned they’re facing unfair competition from farmers facing less stringent welfare rules, as well as planning restrictions.
British Poultry Council chief executive Richard Griffiths said:
“Year-on-year we’re seeing a 4.5 to 5% increase in demand for chicken. And the problem that we’re really running into now is that we do not have the capacity to keep up.”
