LONDON — It’s been an emotional week in Britain, with Boris Johnson hailing a breakthrough on Brexit, and preparing to put his new deal to Parliament, while manufacturers and brands are now demanding government subsidies to offset the pain of new U.S. tariffs, which will come into effect on Friday.
A potentially viable Brexit deal gave the British pound a boost on Thursday, with the currency now trading around $1.29, compared with $1.28 earlier in the day.
British Prime Minister Johnson said in a tweet that his new deal, agreed with the European Union earlier today, was “great” and means the U.K. will be able to “take back control” of its laws and its international trading agreements.
Both Johnson and Jean-Claude Juncker, president of the European Commission, urged the British Parliament and the European Union alike to back the deal, which is supposed to have solved the controversial, temporary Irish backstop agreement that will regulate movement of goods between Northern Ireland and the Republic of Ireland until a final trade deal between the U.K. and the EU is agreed upon.
British MPs will vote on Johnson’s proposal on Saturday during an extraordinary session of Parliament. Northern Ireland’s Democratic Unionist Party, which is supposed to be supporting the Conservative government, has already said it will not back Johnson’s latest proposal during Saturday’s vote.
Separately, on Thursday, members of the UKFT met with one of Johnson’s ministers, international trade secretary Liz Truss today, to ask for subsidies to offset a raft of tariffs resulting from a trade war with the U.S.
The retaliatory tariffs that the U.S. is due to introduce Friday will see 17 fashion and textile product lines spanning sweaters made of wool, cashmere, cotton or man-made fibers, as well as women’s anoraks, men’s suits, pajamas, swimwear, blankets and bed linens, attract an additional 25 percent duty.
As reported, the tariffs relate to a long-standing trade dispute over subsidies granted to Boeing and Airbus. The 25 percent tariff is in addition to the normal duties that apply on these products.
Adam Mansell, chief executive officer of UKFT, which lobbies on behalf of the U.K. fashion and textile industry, said waiting for the outcome of a potential free-trade agreement with the U.S., post-Brexit, is not enough. “We need the government to take direct action now to support our manufacturing industry.
“Some companies will be facing tariffs of more than 40 percent on some products. At a time when the industry is facing huge uncertainty over the impact of Brexit, this is devastating.”
UKFT wants the British government to subsidize affected brands in the meantime.
The organization has argued that the new measures will affect 35 million pounds worth of exports and companies will be facing an extra 8.8 million pounds in tariffs. “The U.K. is the only country facing tariffs on our fashion and textile exports, so if these tariffs do come in, our companies will be at a massive disadvantage to our European competitors,” Mansell said.
“We will be urging our government to underwrite the cost of these tariffs, which are the result of a dispute that has nothing to do with our industry.”
According to a statement from UKFT, Truss said the government is taking the issue seriously, had raised it with the highest levels of the U.S. administration, and will continue to do so until the tariffs are dropped.
“We are working closely with the U.S., EU and European partners to support a negotiated settlement to the Airbus and Boeing disputes,” Truss said.
She also suggested that a new U.K.-U.S. Free Trade Agreement could provide “an avenue to avoid future trade disputes. Negotiating an FTA with the United States is one of the highest priorities of the Secretary of State,” Truss added.
But will Brexit ever happen? And, if it does happen, how long will it take for Britain to negotiate that FTA with the U.S.?
On Saturday, British parliamentarians will vote on Johnson’s new deal. Members of Parliament agree on very little these days, so it’s unlikely his proposal will pass. Last month, however, they drew up a law saying that leaving the EU with no deal at all is a no-no, and that an extension to the Brexit deadline would be necessary if Johnson’s deal were to be voted down.
Britain is due to leave the EU on Oct. 31, although if Johnson cannot get this latest deal passed, he will be obliged to ask the EU for another extension. He is already lobbying EU leaders to reject that request.
If parliamentarians do not agree to the deal, it is likely that Britain will hold an early general election, with Johnson and his Conservative party looking to gain a parliamentary majority that will make any future votes on Brexit easier to pass.
Despite Thursday’s uptick, the British pound is still trading at historic lows compared with its pre-referendum high of $1.48 and post-referendum drop to $1.30.