Big week for international trade deals – but is any win really a win?

The world of international trade typically moves quickly, but there is no denying this week has been busier than normal for Keir Starmer and business & trade secretary Jonathan Reynolds.

Following a years-in-the-making “historic” free trade agreement with India on Tuesday – which will see British food and drink producers benefit significantly from the lowering of prohibitive tariffs on an array of products – the UK has now also fallen in the good graces of Donald Trump, who has announced a “full and comprehensive” deal with Britain that will “cement” the countries’ “special relationship”.

For the Labour government, both are evident victories that will improve the health of the UK economy. But is any win really a win? The reality is the two trade deals are extremely different – and will therefore bring different gains to the economy. So what are the nuances of these landmark announcements?

India trade deal

The India FTA essentially constitutes the biggest bilateral trade deal that the UK has signed since Brexit. It has involved a number of meetings led by several ministers across different governments over the years, showing the complexity of what it entails and how long it took to fine-tune it.

It will see India lower or cut tariffs worth over £400m when the deal comes into force, which would more than double to around £900m after 10 years, DBT estimated.

Some of the biggest beneficiaries include food and drink manufacturers – particularly scotch whisky, gin, salmon, lamb, confectionery and chocolate, soft drinks and biscuits – who already exported nearly £300m worth of food and drink to India in 2024, according to the FDF.

The FTA will also “provide UK manufacturers with greater access to ingredients produced in India, strengthening the supply chain resilience and competitiveness for our sector”, FDF chief Karen Betts explained.

UK-India trade is already worth over £40bn a year, and the government predicts this number will grow by a massive £25.5bn a year by 2040, boosting UK GDP by £4.8bn “in the long run”. For many, it is the opening of an entire new market, one that was previously made inaccessible by sky-high tariffs. And with India on track to become one of the biggest global economies in coming years, it is a whole new world of commerce that just opened, with significant opportunities up for grabs.

It says a lot that even the toughest of communities to please – the NFU, of course – has called it “balanced and considered”.

US trade deal

The US trade deal, on the other hand, is much less complex and much more reactive. It is mainly the result of diplomatic efforts from the UK government to overturn or ease the economic pain caused by the tariffs unleashed by the Trump administration last month, rather than the product of well-rounded trade discussions that could equally benefit both countries.

And in many ways, it’s just a return to where relationships were two months ago, rather than providing any progress or constituting the post-Brexit win so many UK leaders have attempted over the years.

In this case, the NFU doesn’t seem too certain about the deal’s contents, urging government to not give up its high agriculture and food standards in exchange for a cut in car and steel levies after US officials claimed the deal would cover American beef exports.

The group’s president Tom Bradshaw also argued that a deal that offers “nothing more than the reduction or removal of tariffs which didn’t exist eight weeks ago would be an unimaginable failure”. And he’s not wrong.

EU relations and global economy

In the fanfare of Trump’s big claims, it’s also important to remember that, in the grand scheme of things, even if there was a full trade agreement with the US, the gains would still be “fairly modest”, according to the BBC’s UK political correspondent Rob Watson. Such a deal would represent a boost of 1% to the British economy – substantial, no doubt, but still incomparable to the 4% losses from Brexit.

This is why drawing a red line on things like chlorinated chicken and hormone-treated beef with the US is extra vital in the context of talks with the EU, which will surely be reluctant to trade with the UK if those products end up in our markets.

And in striking this deal, the UK is still not immune to the effects of Trump’s trade war with China, which will inevitably spill on to the global economy.

So in the lead-up to the “Brexit reset” summit, it is paramount that Starmer’s team bears these complexities in mind and remembers how other trade relationships are equally – if not more important – than the “special” one across the pond.