The U.S.-U.K. deal shows the trade war is here to stay

Neil Irwin & Courtenay Brown

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Markets cheered the new trade pact between the U.S. and U.K. on Thursday.But the details show that trade war relief will only go so far, even as the de-escalation road map becomes clearer.

The big picture: The first significant trade accord of this Trump term affirms that the president is in dealmaking mode and wants to steer around the kinds of economic risks generated by his original announcement of large-scale reciprocal tariffs.

• But U.K. imports will continue to carry a 10% tariff, up from a pre-Trump average of 1.3%. The president referred to that as the "lowest end" import tax.
• The British were perhaps the best positioned among major economies to reach a quick deal with the Trump administration.
• Things get harder from here, with bigger trading partners — China, Canada, and the European Union — facing deeper mutual hostility, bigger trade imbalances, and more complex disputes.

Between the lines: The U.K. deal offers something of a template — perhaps even a best case — of what other countries might achieve in rapid-fire talks with the U.S. government.

• The U.S. runs a trade surplus with the U.K., has deep geopolitical ties, and the British government has moved gingerly around any talk of retaliation.
• As Evercore ISI's Sarah Bianchi wrote, "if the UK isn't getting down to zero, it is very unlikely that anyone is."