The United States and Britain announced on Thursday that they had reached a deal aimed at reducing tariffs on certain imports, including steel, cars, and ethanol, while also strengthening the economic ties between the two nations.
During a conversation in the Oval Office, President Trump and British Prime Minister Keir Starmer expressed mutual congratulations, with Mr. Starmer describing the day as "fantastic" and "historic." However, it became evident that the announcement represented only a framework for a deal, necessitating further negotiations in the coming weeks before finalization.
This marks the first trade deal since President Trump implemented increased tariffs. The Trump administration has faced pressure to establish agreements to alleviate market uncertainty, with Mr. Trump indicating that this deal would be the first of several.
The administration projected that the agreement would create export opportunities valued at $5 billion for American businesses, alongside generating $6 billion in tariff revenue. Nonetheless, Mr. Trump acknowledged that final details were still being finalized, and British officials confirmed ongoing efforts to negotiate lower tariffs not covered by the current deal.
The agreement specifically addresses the auto industry in Britain, which will now face a 10 percent tariff on the first 100,000 cars exported annually to the United States. In 2024, Britain exported 92,000 vehicles to the U.S., according to Oxford Economics data. British officials noted that previous higher tariffs posed risks to jobs within the auto sector, which relies on the U.S. market for over a quarter of its exports.
Britain will also benefit from exemptions on tariffs for steel and aluminum, in return for increasing its quota on beef imports from the United States and eliminating tariffs on ethanol. Furthermore, Britain will receive "preferential treatment" for any future sectoral tariffs, including those on pharmaceuticals.
In addition to the tariff discussions, both countries reached a "high-level" agreement focused on economic security and technology collaboration across sectors such as life sciences, quantum computing, and biotechnology.
Despite the positive developments, the deal remains provisional, with no specific timeline for implementation. The British government is still working to negotiate reductions on the 10 percent tariff affecting most other goods. Jonathan Reynolds, Britain’s business and trade secretary, characterized the agreement as a "landmark breakthrough," although he noted it only established the general terms for future negotiations.
The British government views the deal as a victory, as it positions the country more favorably compared to recent weeks. With the auto and steel industries facing challenges, any measures to enhance their export capabilities to the U.S. market are seen as beneficial. Importantly, the agreement does not require Britain to compromise on its auto or food safety standards, which could have complicated relations with the European Union. Additionally, Britain did not alter its tariffs on cars or modify its digital services tax, which has been a point of contention with the Trump administration.
On the U.S. side, the agreement has been praised by American ranchers, particularly regarding increased beef exports, although the beef must still be free of hormones. The National Cattlemen’s Beef Association referred to the deal as a "tremendous win."
However, economists caution that the agreement is not a significant economic game changer. British goods exports continue to face higher tariffs than they did two months ago, with the baseline 10 percent tariff still in effect. Moreover, Britain's trade relationship with the United States is primarily service-oriented, which is not impacted by tariff changes. Experts highlight that reducing economic uncertainty will require the Trump administration to pursue additional trade agreements and establish more predictable trade policies.