On Thursday, President Donald Trump announced a significant trade agreement with the United Kingdom, signaling a potential easing of the historically high tariffs that have posed a serious threat to both the US and global economies. The deal was finalized during a late-night call with UK Prime Minister Keir Starmer on Wednesday and is still being refined, as Starmer noted in a phone call to the Oval Office on Thursday. However, it could serve as a framework for other countries seeking relief from American tariffs. Trump emphasized that the agreement with the UK would be substantial.
“The agreement with the United Kingdom is comprehensive and will strengthen the bond between the United States and the UK for many years,” Trump stated in a Truth Social post on Thursday morning. “Given our long history and shared allegiance, it is a great honor to make the UK our FIRST announcement. We have many other deals in advanced stages of negotiation that will follow!” “This should be a significant and exciting day for both the United States and the United Kingdom,” he added in a separate message. However, the announcement regarding the UK is somewhat limited in scope, focusing heavily on future commitments while maintaining the existing 10% universal tariffs that Trump imposed on nearly all goods entering the United States during his “Liberation Day” announcement on April 2, according to a US and UK official who provided insights about the deal to CNN.
On Thursday, Trump referred to the agreement as a “huge deal,” but he provided only a general overview during his remarks in the Oval Office. Commerce Secretary Howard Lutnick announced that the United Kingdom would lower trade barriers on several agricultural products, including ethanol, beef, and machinery imported from the United States. Additionally, the UK will be allowed to export 100,000 cars to the U.S. at a reduced tariff rate of 10%, down from the 25% tariffs Trump had previously imposed on foreign vehicles. The UK will also collaborate with the U.S. to implement 25% tariffs on foreign steel and aluminum, establishing a joint tariff agreement that will create a free trade zone for these metals between the two nations. Furthermore, pharmaceuticals will be exempt from tariffs in this arrangement. Officials from both countries emphasized to CNN that some details are still being finalized, a sentiment echoed by Starmer and Peter Mandelson, the British ambassador to the United States, on Thursday. However, the general framework of the announcement is becoming clearer.
Starmer has prioritized securing a deal with Trump as a central aspect of the bilateral relationship, emphasizing trade during his private discussions with Trump at the White House in February. UK officials have shown strong interest in a comprehensive trade agreement, but in recent weeks, they have adopted a more focused strategy, urging the administration to consider market access and potential relief from Trump’s 25% tariffs on autos and steel. Financial markets reacted positively to the news of a deal, with the Dow climbing nearly 400 points, or 0.9%. The S&P 500 increased by 0.8%, while the Nasdaq rose by 1.1%. In contrast, the FTSE 100 dropped by 0.2% following the trade announcement and a rate cut from the Bank of England earlier that Thursday.
