Beijing Decries UK-US Trade Pact, Alleges Damage To Chinese Interests

China has reportedly taken exception to the trade deal the UK has negotiated with the U.S., arguing that the pact hurts its interests.

Britain was the first country to clinch an agreement with the U.S., resulting in the removal of the tariffs imposed on steel and autos, even as the baseline 10% tariff stayed.

The exemption on the sector-specific tariffs was given on the condition that the UK would work toward “promptly” meeting U.S. requirements on supply-chain security and the ownership of relevant production facilities.

The Trump administration also reportedly clarified that China was the intended target.

The agreement terms also specified that tariff relief for UK goods would depend on the outcome of the Section 232 investigations, which examined whether and how specific imports impact U.S. national security. 

A Financial Times report on Tuesday said that Beijing has not been happy with the UK’s deal with the U.S., which envisages heavy protection for domestic steel and pharmaceutical industries.

China’s Foreign Ministry reportedly said, “Co-operation between states should not be conducted against or to the detriment of the interests of third parties.”

The Chinese stance puts the UK in a fix, given the latter’s intent to rebuild its relationship with the world’s second-largest economy.

The UK is also one of the biggest export destinations for China-made electric vehicles (EVs) and plug-in hybrids, according to a South China Morning post report. Citing Chinese Customs data, the report said plug-in exports to the UK surged about 600% year over year in the first quarter, although EV sales slid nearly 3%.

Meanwhile, China and the U.S. announced a bilateral pact on Monday, putting on hold the bulk of the tariffs announced by either party since the Liberation Day tariffs were announced by the Trump administration in early April.

A separate Guardian report said China has decided to postpone a 60-country UK energy summit to be held next week amid differences of opinion over the latter’s involvement in the British infrastructure sector.

The SPDR S&P 500 ETF (SPY), an exchange-traded fund (ETF) that tracks the S&P 500 Index, is up about 0.43% for the year and the iShares MSCI United Kingdom ETF (EWU) has gained over 13%.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

Read Next: Microsoft Layoffs Show ‘Commitment' To Profitable Growth Amid Surging AI Costs, Says Barclays: Retail In Wait-And-Watch Mode