This week in trade saw mixed progress on trade and defence tensions between the EU and US, an important Border Target Operating Model (BTOM) update and another UK steel firm in need of government support.
The big picture: The Trump tariff saga rattles on as the EU and US attempt to confirm the deal agreed at the start of the month, with approximately 70% of European imports to the US set for 15% duties.
After further discussions, the two parties this week released a joint statement to formalise the deal, announcing that they have agreed on a ‘framework agreement’.
Politico notes that key takeaways include that tariffs on EU pharmaceuticals, lumber and semiconductors will be capped at 15%. Automotive tariffs will fall from 27.5% to 15% – although only if the EU agrees to remove tariffs on US industrial goods – and there’s no mention of EU taxes on US tech firms, a recurrent sticking point in negotiations this summer.
EU trade commissioner Maroš Šefcovič said that “this is not the end; it’s the beginning. This framework is a first step.”
Elsewhere, European hopes were more firmly dashed by the US, amid another set of failed US-Russia ceasefire talks and inconsistent messaging on support for Ukraine.
Having set off to Alaska with intentions of securing a ceasefire deal that wouldn’t involve Ukraine ceding territory, Trump changed his tune over the weekend, announcing Ukraine should cut a deal because “Russia is a very big power, and they're not”.
However, following an intensive Russian attack on Ukraine this week, which saw 574 drones and 40 missiles launched, Trump urged Ukraine to “fight back” and attacked predecessor Joe Biden for not supplying greater munitions.
Good week/bad week: Good news – potentially – for Liberty Steel, another struggling UK manufacturer receiving government support following a similar intervention in British Steel’s Scunthorpe site earlier this year.
The company was subject to a winding down order, and is now entering administration, and will be under the “control of special managers appointed by the government’s official receiver”.
In a press release, UK Steel director Gareth Stace said that he “welcomes the government’s recognition of the importance of the Liberty Speciality Steel assets and hopes that a new owner is found quickly”.
“Low production levels of recent years have left significant holes in the domestic supply chain that have been filled by imports. We hope to see these holes quickly filled by UK-made steel.”
Liberty steel produces steel for military equipment, vehicles and oil and gas components, and employs 1,450 at its South Yorkshire site.
A poor week for the German economy, which is raising recession fears again after a 0.3% contraction in Q2 – deeper than the 0.1% contraction estimated last month.
Speaking to the FT, ING’s global head of macro Carsten Brzeski said that “it looks increasingly unlikely that any substantial recovery will materialise before 2026”.
Q1 performance was bolstered by a surge in US exports ahead of anticipated Trump tariffs, though this dropped 0.6% in Q2.
European Central Bank president Christine Lagarde warned this week of an upcoming slowdown in euro area growth this year, which she said “was already evident in the second quarter of this year”.
How’s stat? 3.8% – that’s the UK’s inflation rate, which jumped up to the highest level since January 2024 this month. While partially attributed to the summer season’s high air fares, the price of food and non-alcoholic drinks have continued to rise steeply in recent years, prompting chancellor Rachel Reeves to say “there’s more to do to ease the cost of living”.
Quote of the week: “If the Kremlin thinks they can hide their desperate attempts to soften the blow of our sanctions by laundering transactions through dodgy crypto networks – they are sorely mistaken.”
That was UK sanctions minister Stephen Doughty speaking as the government announced a crackdown on sanctions evasion. Two crypto currency exchanges, Kyrgyzstan-based Capital Bank and its director were hit with fresh sanctions over engagement with Russia this week.
The week in customs: An update this week from the Department for Environment, Food & Rural Affairs (Defra) – upcoming checks and inspections for sanitary and phytosanitary (SPS) goods under BTOM have been cancelled ahead of the decision on the UK-EU SPS agreement.
The Animal and Plant Health Agency have cautioned that existing BTOM measures and other risk-based checks will remain in place but reiterated that no further measures are set to come into force.
What else we covered: Ahead of the US de minimis exemption for low-value items closing next week (29 August), our customs experts explained what’s changing and what this means for traders. Members can get a more in-depth look at the ramifications in an exclusive Ask the Experts instalment on the topic.
A slowdown in shipping driven by US tariffs led our member-exclusive State of Freight feature.
Aside from tariff tensions, we covered the latest challenges in the EU-China relationship, as Germany’s foreign minister elicited criticism from Beijing over Taiwan comments – that’s in our European Trade Digest.
True facts: US gamers are set for disappointment as Sony’s PlayStation 5 becomes the latest tariff consumer casualty.
The BBC reports that the games console’s retail price jumped US$50 yesterday, as the Japanese manufacturer adjusts to the new US 15% tariff rates.
Other recent price hikes in the sector include Nintendo products – also a Japanese product – with fans worldwide shocked by the £75 price tag on the Mario Kart game released alongside the Nintendo Switch 2.
