US President Donald Trump has announced a new trade agreement with the UK, making it the first country to reach a deal with the US since the White House introduced sweeping tariffs last month. Both Trump and UK Prime Minister Sir Keir Starmer hailed the agreement as a historic milestone in the two countries’ relations, but the deal falls short of a comprehensive trade agreement.
Under the terms of the deal, the UK will be able to export 100,000 cars per year to the US with a reduced 10 per cent tariff, down from the previous 27.5 per cent tariff. This quota is large enough to encompass nearly all current UK car exports to the US. Additionally, tariffs on steel and aluminium will be removed entirely, falling from 25 per cent to zero, while a 10 per cent tariff on most other goods will remain in place.
The deal also includes provisions for “reciprocal” market access for beef. UK farmers will be granted a tariff-free quota of 13,000 metric tonnes of beef to export to the US. Prime Minister Starmer stressed that this would not affect food safety standards, with no changes to existing regulations. Furthermore, the UK will remove its tariff on US ethanol imports, marking a significant change in the trade dynamics between the two nations.
While the deal brings some relief, it has been met with mixed reactions. Rolls-Royce, the UK aerospace company, saw its shares rise by 3.6 per cent following the announcement, as the US agreed to remove tariffs on its engines. However, the FTSE 100, a key indicator of UK stocks, posted its biggest daily loss in a month, reflecting broader concerns over market performance despite the trade deal.
Criticism has emerged from within the Conservative Party, with Tory leader Kemi Badenoch accusing the UK government of being “shafted” by the deal. Badenoch pointed to the disparity between the reduction of tariffs on UK exports to the US and the increase in US tariffs on UK goods under Trump’s administration. She criticized Labour’s role in the negotiations, suggesting that the UK was not benefitting from the agreement as much as it could.
Oxford Economics also offered a downbeat assessment, arguing that the limited tariff relief would have little impact on the US economy. According to Michael Pearce, the deal would “nibble away” at the effective tariff rate but would not alter the broader economic landscape. Pearce further noted that the agreement did not address more contentious issues, such as the UK’s digital services tax or the opening of healthcare markets to US providers, indicating that future negotiations might be similarly limited.
Some sectors, such as the UK’s pharmaceutical industry, were said to benefit from the deal, with Starmer highlighting significant preferential treatment for the sector, even though US tariffs on pharmaceuticals have not yet been imposed.
Unions representing UK workers, particularly in the steel and auto industries, expressed relief at the agreement. Sharon Graham, General Secretary of the Unite union, noted that the deal helped remove the immediate threat of US tariffs on UK steel imports, while Mike Hawes of the Society of Motor Manufacturers and Traders called the reduction of car tariffs “much-needed relief” for UK exporters.
Despite these positive aspects, questions remain about the long-term benefits of the deal, with critics suggesting that the agreement is more symbolic than substantial. The deal’s failure to address more complex trade issues, coupled with the ongoing tariffs on many UK goods, points to a trade relationship that remains fraught with challenges. As President Trump confirmed, the 10 per cent baseline tariff on UK goods will remain in place, and he warned that other countries might face even higher tariffs under his new reciprocal scheme.
