Is the UK’s New Trade Deal a Double-Edged Sword for China?

In a bold rebuttal, the UK government has denied accusations that its newly forged tariff agreement with the US could adversely affect China. Officials stressed that there is “no veto on Chinese investment” included in the trade deal. The recent agreement with the US represents a significant change from the heightened tariffs on metals and cars that were previously levied by former President Donald Trump. However, it comes with conditions that require the UK to quickly address US demands regarding the security of supply chains for steel and aluminium products exported to America.

Chinese officials have expressed concerns that this might lead to exclusion from supplying goods destined for the US market, emphasizing that bilateral trade agreements should not negatively impact other nations. The spokesperson for the Chinese foreign ministry, Lin Jian, highlighted that cooperation between countries should avoid harm to the interests of third parties.

Currently, China ranks as the world’s second-largest economy and is the fifth-largest trading partner for the UK, with total bilateral trade reaching £98.4bn in 2024. While the UK aims to protect jobs and businesses through the US trade agreement, officials assert that the external aspects of the deal do not intend to undermine positive economic ties with China.

The trade landscape remains complex, as Trump’s 10% blanket tariffs on many UK goods into the US stay in place. However, key exports like steel and aluminium benefit from reduced or eliminated tariffs, marking a step forward in trade negotiations.

Amid the ongoing trade war between the US and China, which has seen a dramatic imbalance—with the US importing much more from China than it exports—the two countries have indicated progress towards a resolution. Recent discussions were described as a “total reset” in trade relations, hinting at plans to reduce existing tariffs on both sides significantly. This development could serve to alleviate tensions in one of the world’s most crucial economic rivalries.