The news media are reporting that JD Vance said that “the US is likely to seal an economic agreement with the UK that benefits both nations. He also added that with the UK, they have a much more reciprocal relationship than they have with Germany for example”.
So, it’s logical to seal a deal with your closest “friends” first. As a reminder, the US imposed a 10% reciprocal tariff on UK and of course the 25% levies on autos, steel and aluminium that Trump slapped on everyone.
We have also an Indian trade official saying that India has decided to go for a path of trade liberalisation with the US. It will be 90 hectic days for the US to strike all the promised deals. Anyway, the point is not about the news, but about the expectations that the market could derive from the first trade deals.
Markets move on future expectations and it doesn’t matter if it’s right or wrong, it’s always in flux and adjusts to new information. The first trade deals could give the markets a rough benchmark on future trade deals and on the likely tariff rates. The key number is 10%. This is what the markets will want to see on average to celebrate easing in trade wars and recessionary fears
