Trade deals agreed with India and the US this week have done little to shift market sentiment over the prospects for UK growth.
Forwarders said they did not envision much of a shift in capacity between the UK and the two countries in the wake of the deals, the benefits from the US agreement seemingly serving to mitigate the damage done by President Trump’s tariff policy.
Under the deal with India, the UK agreed to reduce its 12% duty on garments to zero, allowing it to compete with rivals like Bangladesh that export to the UK duty-free.
Although the gap between the rivals on this product line is vast – Bangladesh being responsible for more than 23% of UK clothing and footwear imports, India around 6% – the Delhi government has been attempting to challenge its neighbour. With no duty, it believes it can double its share over the next four years.
And there are expectations that there may be a flood of investment into the sector, particularly with China having lost its supremacy to Bangladesh in garment exports in recent years, only to face political instability of its own.
However, a Dhaka-based forwarder said they did not envision “any sort of major shift” in trade patterns or capacity offerings as a consequence of the new trade deal.
Citing figures from the Bangladeshi Garment Manufacturers and Exporters’ Association, the forwarder noted that some 178.4m kg of garments were sent to UK last year, “at least 65% of our total volume”.
However, head of Virgin Cargo Nick Diesel expressed optimism of increased UK-India trade, the carrier having recently upped frequencies into Bengaluru, Delhi and Mumbai.
“I think it was definitely a good bet, putting significant capacity into India. It has certainly paid off over the past couple of years,” he said earlier this year.
Following swiftly on the heels of the UK-India deal, came the news of the trade deal with the US.
The US will cut its tariff on imports of UK cars from 27.5% to 10%, but only for the first 100,000 vehicles – which broadly aligns with current UK car exports to the US – with tariffs also cut on imported UK steel.
In exchange, the UK will remove its 20% tariff on US beef. Added to which, it will create a “preferential duty-free quota of 13,000 tonnes for US beef and offer a preferential duty-free tariff rate quota on 1.4bn litres of US ethanol”, seemingly creating growth opportunities for these US exports.
But Hugo Pakula, CEO of US-based customs firm Tru Identity, questioned the extent to which there was an actual agreement, noting that both sides recognised it was not legally binding.
Mr Pakula said: “Anything could happen from here. We’re all in the wild west of trade agreements right now,” pointing to the prevalence of the words “intend to” in the document released by the US.