UK faces higher effective US tariffs than EU rivals after trade deal

EU forced-labor law gave it tariff edge over UK

Britain’s trade deal with the Trump administration has left exporters facing higher effective tariffs than European Union competitors in some sectors, undercutting the post-Brexit advantage the government had promoted, according to a BBC News analysis by economics editor Faisal Islam.

The disparity stems from the EU’s decision to pass legislation banning goods produced with forced labor — mirroring US law — a step the UK has not taken despite saying in October 2025 it was “considering how best to reflect this position,” citing “operational and legal complexities.” Islam reported that the EU’s forced-labor ban qualified it for better treatment under the new US tariff regime.

While both the UK and the EU face a headline tariff rate of 10%, the EU’s rate is flat, while the UK’s applies alongside other tariffs on a range of goods including footwear and textiles, Islam wrote. The UK has struck side deals covering medicines, steel, aluminium, cars and whisky — the latter facilitated by King Charles — but the overall trade-weighted effective tariff rate for the EU could end up a bit lower than the UK’s, Islam reported.

British Chambers of Commerce trade expert William Bain said the EU’s position gives its exporters a competitive advantage into the US in some sectors, according to the BBC.

The forced-labor rationale represents the latest in a series of shifting justifications for Trump’s trade levies on allies, which Islam described — citing an unnamed industry figure — as “tariffs in search of an authority.” Previous rationales included the opioid crisis, illegal migration, and the need to bring manufacturing back to US shores, Islam wrote. The forced-labor justification shores up the tariffs against potential challenges from Congress or the courts, he reported.

Since the UK government said it was considering a forced-labor ban, the country has welcomed imports of Chinese cars and is exploring a services trade deal with China, Islam noted. The UK-China relationship has been a balancing act for the government.

The broader pattern of trade diversion is visible globally, Islam reported: Canada increased its trade with the rest of the world by more than it lost from the US. China’s total dollar trade with the US was flat in the first half of 2026 versus the same period in 2025, while its global trade rose 21%, including a 14% increase with the EU, 11% with the UK, and 24% with Africa.

The UK now faces a choice, Islam wrote: pursue an EU-style forced-labor ban to seek a better US deal, or maintain its current course by relying on existing side deals on medicines, metals and cars while balancing trade with both the US and China.