China Slams UK-US Trade Pact, Finds It 'Against' Its Interests: 'This Type Of Poison Pill Clause Is Actually Worse Than The Tariffs'

The recent trade agreement between the U.K. and the U.S. has been met with disapproval from China, potentially adding more complexity to London’s ongoing efforts to rebuild its relations with Beijing.

What Happened: The trade pact, which imposes strict security measures on Britain’s steel and pharmaceutical sectors, is the first of its kind since the U.S. introduced “reciprocal tariffs” last month. China’s foreign ministry expressed that it is a “fundamental principle” that agreements between nations should not be aimed at other countries, reported the Financial Times.

This situation puts London in a delicate position between the two economic powers and may further complicate the U.K. government’s efforts to rebuild ties with China. Beijing cautioned countries against trade deals with the U.S. that could harm Chinese interests, concerned that President Trump may use such agreements to push China out of supply chains.

"Co-operation between states should not be conducted against or to the detriment of the interests of third parties,"  the Chinese foreign ministry told the publication.

Meanwhile, Zhang Yansheng, a senior researcher at the China Academy of Macroeconomic Research, saw this as Washington’s attempt to “isolate” China. According to him, "This type of poison pill clause is actually worse than the tariffs." Yansheng urges China to discuss the matter with the U.K. without any retaliation.

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Why It Matters: This development follows the US-UK trade deal that was sealed earlier this month, aimed at cutting tariffs, boosting industrial ties and securing billions in new market access. The trade agreement also entails reductions in punitive U.S. tariffs on U.K. car and steel exports, though it stops short of fully eliminating the baseline 10% tariff on British goods. Tariff relief for British products depends on the outcome of Section 232 investigations, which assess how certain imports affect U.S. national security.

However, the deal drew criticism from American automakers, including Ford (NYSE:F), General Motors (NYSE:GM) and Stellantis (NYSE:STLA), who feared it could harm the U.S. auto industry.

Furthermore, Chinese President Xi Jinping on Tuesday warned that “bullying and hegemony will only result in self-isolation,” in his first remarks since the 90-day U.S.-China tariff suspension. This statement indirectly referred to the U.S. and could be seen as a cautionary message to other nations, including the U.K.

In response to China’s criticism U.K. government stated,  "trade and investment with China remain important to the U.K." and that it would continue “to engage pragmatically in areas that are rooted in U.K. and global interests".

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.