The UK concluded its first deal with the US as President Donald Trump sparked a trade war and won punitive tariff cuts on automobile and steel exports, but failed to reverse the 10% collection applied to most goods.
The agreement was announced on Thursday by the oval US president, with British Prime Minister Kielstama taking part in the phone. Both leaders effectively praised the strength of their national relations.
However, the scope of US-UK transactions is limited, and much of the details must be resolved, and the end result still leaves Trump facing a more severe trading relationship with the US than before he introduced global tariffs that Trump cleaned up last month.
US stocks rose after the announcement, and investors were encouraged by the prospect of further transactions with China to limit tax damages that suffocated trade. The S&P 500 has risen by more than 1% since March 27, then handed over the ground and ended the day of 0.6% above.
US Treasury Secretary Scott Bescent and a senior Chinese official are scheduled to hold a meeting in Switzerland this weekend, seeking to rule out a tariff war between the two economies of the world.
“I think China wants to do so many deals, and we’ll see how that works,” Trump said. The US president was asked if he would consider lowering US tariffs on Chinese imports.
The US-UK agreement, described by Trump as “complete and comprehensive,” maintains the 10% US tax on most UK exports that Trump imposed last month.
The two were set to continue negotiating tariff cuts on “critical sectors,” according to the contract text released later Thursday.
But it is decisive to provide the UK with a 25% extra tariff reprieve on cars and metals previously set by the Trump administration and especially the UK.
According to the UK government, UK steel and aluminum exports will be rated zero at tariffs, but the first 100,000 British cars sold in the US each year (most of the total) will reduce their taxes by 10%.
“This historic deal is provided to UK businesses and UK workers, protecting thousands of UK jobs in key sectors such as automotive manufacturing and steel,” Starmer said.
In exchange, the UK has improved access to the market through a low-tax quota system for farmers and ranchers, but can pave the way for importing some beef without changing food standards. The UK will remove tariffs of up to 1.4 billion litres of US ethanol.
“Our biggest concern is that the agricultural sector has been chosen to take on the heavy burden of removing tariffs on other industries in the economy,” said Tom Bradshaw, chairman of the British National Federation of Farmers.
Trump and Starmer’s team also agreed to work on a digital trade agreement to deepen their cooperation and address concerns about the UK’s digital services tax, targeting major technologies that remain in place for now.
Both sides agreed to negotiate further drugs that US officials say will apply tariffs in a few weeks.
“The US and the UK have been trying to make a deal for years, but it never got there. It was with this prime minister.
The priority addressing workers at the Jaguar Land Rover plant in the West Midlands said the agreement was the beginning of the process. “It’s a saved job, I’m not doing my job,” he said. “We will continue to build on this agreement.”
He said he negotiated a “priority treatment” in the UK if Trump decides in the future to raise tariffs on other sectors, including film.
But conservative trade spokesman Andrew Griffiths said he was disappointed that he called the agreement “a diet coke deal, not a real one.” “We’ve just been shafted,” said Kemi Badenok, the leader of the Tory.
An agreement with the US can provide a template for US negotiations with other countries. It is considered to be the closest agreement between India, Vietnam, Japan, South Korea and Washington.
But Trump warned that he would argue that overall taxation on countries with an overall trade surplus with the United States could be well over 10%. “Some will be much higher,” he said. “Templates of 10 are probably the worst,” he added.
It also raised questions among legal and trade experts as to whether the US-UK transaction is in line with the rules of the World Trade Organization that require the application of tariffs equally.
Ignacio García Bercero, now a former senior official of the European Commission at Bruegel Think-Tank, said the UK’s decision to cut tariffs on US exporters without extending the same transaction to other countries risks legal challenges.
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Under the WTO’s “most advantageous countries” concept, countries will need to provide the same tariff charges to all countries unless cut by a bilateral trade agreement that covers “virtually all trade” announced Thursday.
“We are concerned that the UK has provided the US with tariffs on the preferred function. This cannot be justified if there is no US commitment to eliminate tariffs in other countries,” added Bercero.
However, one trade lawyer who rejected the name pointed out that WTO rules can introduce trade transactions in stages.
Additional Reports by Kate Duguid in New York
