Faisal Islam: The UK's Trump trade deal no longer looks world-beating

Here is a story making headlines in the economy: Faisal Islam: The UK's Trump trade deal no longer looks world-beatingImage source, Getty ImagesByFaisal Islam Economics editorPublished24 July 2026It has been a long road for President Donald Trump as he looks for a justification to erect a tariff wall around the US, including against key allies. From the opioid crisis to illegal migration, then the need to bring manufacturing back to America's shores, the list goes on. Through Trump's second term, there has been a new justification almost every month for the trade levies he is seeking to place on allies.

Some have been overturned by the courts, others by economics and some even by their own logic. And so, Trump has now turned to effectively accusing dozens of trade partners of trading in goods that have been produced using forced labour. These are "tariffs in search of an authority", as one industry figure put it.

Economic Details

The forced labour line shores up President Trump's tariffs against a challenge from Congress or the courts. In practice, the levies are curiously similar by country to a previous round of tariffs imposed supposedly for completely different reasons. The good news for the UK is that the regime effectively remains the same as before.

What has changed is that our nearest neighbours in the European Union now have a much better deal than before, and in turn are in a better situation than the UK. While the UK and the EU each appear to have a 10% rate, the EU's is a flat rate, while the UK's will apply alongside other tariffs, in a range of goods including footwear and textiles. The government has struck effective side deals on medicines, steel, aluminium, cars and, with the help of King Charles, whisky.

At the end of this process however the overall trade-weighted effective tariff rate for the EU (8. 5%) could end up a bit lower than the UK's (6. It should not matter that much, but the help given by doing the first deal, and by post-Brexit trade freedoms, looks to have been short-lived.

Analyst Views

The British Chambers of Commerce trade expert William Bain points to the competitive advantage for EU exporters into the US in some sectors. The EU has secured better treatment because it has passed a ban on forced labour goods, which the UK has not. This is not an accusation on the use of forced labour in supply chains.

It is about the passing of specific legislation, mirroring the US ban on products that have used forced labour in supply chains. US hits dozens of countries with new wave of tariffs Published12 hours agoWhat tariffs has Trump introduced and why? Published16 hours agoThere should be scope for a better deal for the UK, but it raises an interesting question about whether the government will pursue an EU-style ban.

This is widely seen as a backdoor way to target China, in particular for conditions in its Xinjiang province.

Financial markets are tracking the development closely as investors assess the likely impact.