Bank of England Governor Comments on U.S.-UK Trade Deal

By David Milliken
LONDON (Reuters) – Bank of England Governor Andrew Bailey stated that the recently concluded trade deal between the United States and Britain is beneficial but still maintains higher tariffs on most British goods exports to the U.S. than prior to last month.

Before the deal’s specifics were revealed on Thursday, the BoE shared projections showing that U.S. President Donald Trump’s tariff plans, as of April 29, would reduce Britain’s economy by approximately 0.3% over three years. Notably, around two-thirds of this impact stems from the indirect effects of U.S. tariffs on Britain’s trading partners instead of direct tariffs on British exports.

In the newly agreed deal, the United States will keep a 10% tariff on the majority of British imports while lowering tariffs on British cars, steel, and aluminum.

Bailey remarked, “It’s good news. I have to say, it’s ‘good news’ in a world where it will leave the effective tariff rate higher than it was before all of this started. I do think we need to bear that in mind,” during a question-and-answer session at an economics conference in Reykjavik.

He has regularly emphasized the importance of maintaining an open global trading system while addressing significant trade surpluses run by some countries.

Additionally, in a BBC interview on Friday, Bailey mentioned that Britain should do “everything we can” to reverse the decline in goods exports to the European Union, a trend that emerged after Britain left the bloc in 2020. He noted that while goods exports constitute a smaller fraction of Britain’s economy compared to some nations, Britain is more vulnerable to the global economy’s health.

Bailey concluded, “The impact of all these developments on the trade front on the UK outlook, is conditional therefore not only on the UK trade agreement, but also what the rest of the world agrees as well,” he added in Reykjavik.