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Investing.com-- The recently announced U.S.-UK trade deal may not herald a wider deescalation in tariffs, ING analysts warned in a Thursday note, stating that progress with China was the only thing that could move the dial.
While ING did note that the UK deal reflected flexibility on tariffs by President Donald Trump’s administration, it was still unclear whether the deal will herald a wider deescalation in tariffs.
“We’re sceptical that the UK’s deal will herald a much broader climbdown from the US administration. A UK deal was relatively low-hanging fruit, given the US has a trade surplus in goods with Britain,” ING analysts said.
“China’s 145% tariffs make up more than 15 percentage points of (the U.S.) average tariff rate, even after the recent electronics exemptions… a de-escalation with China is realistically the only thing that can meaningfully move the dial on the tariff hit.”
Chinese and U.S. officials are set to hold some trade talks in Switzerland this weekend, with Trump stating that he is open to lowering tariffs against China if the talks progress well. A New York Post report said Trump could slash China’s tariffs to 50% by next week.
On the UK trade deal, ING said that the economic impact of the deal on the British economy was “negligible,” while the concessions offered to the U.S. “aren’t considerable.”
Still, the UK deal will also not jeopardize the country’s attempts to hash out a trade deal with the European Union.