Bank of England governor Andrew Bailey said the trade deal concluded between the United States and Britain was a good thing but still left tariffs on most British goods exports to the US higher than they were before last month.
Before details of the deal were announced on Thursday, the BoE published estimates showing US president Donald Trump’s tariff plans as of April 29th would shrink Britain’s economy by about 0.3 per cent over three years.
Around two thirds of the hit was due to the indirect impact of US tariffs on Britain’s other trading partners rather than tariffs directly imposed on British exports.
Under the deal agreed on Thursday, the United States will continue to impose a new 10 per cent tariff on imports of most British goods but will reduce higher tariffs on imports of British cars, steel and aluminium.
“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,” Mr Bailey said in a question and answer session at an economics conference in Reykjavik.
Mr Bailey has spoken repeatedly of his wish to preserve an open global trading system while tackling the persistent large trade surpluses run by some countries.
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Earlier on Friday the BBC published an interview with Mr Bailey where he said Britain should do “everything we can” to reverse the fall in goods exports to the European Union which followed Britain’s 2020 departure from the bloc.
While goods exports do not form as big a share of Britain’s economy as for some other countries, Britain was more exposed than many to the health of the global economy, Mr Bailey said.
“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.
