The UK-US trade deal does not include “cuts or concessions” to the digital services tax, which had reportedly been part of negotiations, according to one senior UK official. The tax on the revenues of global tech companies has long been a bugbear with the US.
The official also confirmed that the UK would get reductions in both the headline 25 per cent tariffs on autos and steel and aluminium, as well as a reduced-tariff quota. The size of other cuts and the quotas is still unclear.
The UK is also expected to reduce its own tariffs on US exports on autos and agricultural products, but will only offer the concession to the US, not to other trade partners.
Trade experts have warned this risks raising legal questions about whether such a deal is compatible with the World Trade Organization’s “most favoured nation” rule, which requires tariff concessions to be offered equally to all trade partners.
This rule can be waived if two countries do a bilateral trade deal covering “substantially all trade” that cuts tariffs between the two partners. UK officials are expected to argue that offering cuts to the US on a preferential basis is legal, because they are part of “a broader deal” of measures.
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