90-day tariff pause means the UK will not need to choose between China and the US

Winnie Cao, Partner and Head of the China desk said:

The 90-day pause in the tariff war between China and America is welcome news for the UK, who are trying to avoid ‘picking a side’ as they wish to develop their trading relationship with both countries.

The bitter US China trade war threatened to force the UK to choose between the two countries, as making a deal with one risked shutting them out of trade talks with the other. But the 90-day pause, intended to allow China and the US to negotiate, is a significant de-escalation, meaning the UK will no longer need to ‘pick a side’.

Earlier in the year the Chancellor, Rachel Reeves, went to China and met Vice-Premier He Lifeng, securing agreements worth £600m for the UK economy. And this month, the long-awaited US UK trade agreement was signed.

While the US cannot veto any Chinese investment made into the UK as part of this agreement, it is clear that US President, Donald Trump and his advisors do not approve of a closer China UK relationship. It remains to be seen how the US will position itself to contain the level of Chinese outbound investment in the UK.

The US is the largest economy in the world and China the second largest. China is a leading exporter of goods such as machinery, electronics and electric vehicles, all which are very valuable to the UK which seeks to invest in green energy and AI. The US and UK trade services with each other and have a long standing ‘special relationship.’ Both countries can also offer the UK vital investment in projects and businesses.

Some Chinese businesses are currently seeking a third country to complete the final stage of their production line before exporting to the US to avoid tariffs. But if the China US tariff war ends, they can directly export to the US again, saving them the additional costs which come with adding an extra leg to their trade journey.

Winnie comments:

The build-up of tariff wars helps no country, hopefully that is now being recognised and the UK can continue to build its trading relations with both China and the US without being caught between them.

Would you like to know more?

If you would like to discuss any of the above, please speak to your usual Blick Rothenberg contact or Winnie Cao using the form below.