US and UK Sign Limited Trade Deal Amid Global Tariff Disputes
US and UK announced a new trade agreement on Thursday. While the deal offers some relief, it keeps key tariffs in place and leaves more negotiations ahead.
Limited Tariff Cuts with Room to Grow
The agreement keeps Trump’s 10% tariffs on most British goods. However, it lowers high US tariffs on British car imports and allows for modest increases in agricultural trade. British tariffs on US goods will fall from an average of 5.1% to 1.8%.
Though described as a “breakthrough,” officials from both sides admit it is not a full free trade agreement. The deal grew out of Trump’s wider tariff campaign aimed at reducing the US’s $1.2 trillion trade deficit.
Prime Minister Starmer praised the deal’s timing, linking it to the 80th anniversary of the end of World War Two in Europe. He said it would protect and create jobs while boosting market access. Trump also welcomed the agreement, calling it a historic moment and promising many more deals in the coming weeks.
Auto, Steel and Agriculture Sectors See Benefits
The US will lower its tariff on British cars from 27.5% to 10% for up to 100,000 vehicles annually, matching the number exported last year. Tariffs on British steel will drop to zero, and the UK’s 19% tax on US ethanol will also be removed under a generous quota system.
A key part of the deal includes new access for American beef exporters. For the first time, UK farmers will be allowed to send up to 13,000 metric tonnes of beef to the US duty-free. However, UK food standards remain unchanged, meaning beef with growth hormones is still banned.
The US Agriculture Secretary welcomed the agreement, predicting a significant increase in beef exports. Yet industry experts noted the challenge of American beef competing with local products in UK supermarkets, where most beef is British or Irish.
Digital Taxes and Tariff Threats Still Loom
The deal does not include changes to Britain’s 2% digital services tax, which has been a sticking point in talks. A UK official acknowledged the issue remains unresolved and might be revisited later.
On pharmaceuticals, there were few details. Industry sources warned new tariffs could hurt companies like AstraZeneca and GSK, though the US pledged to support a secure pharmaceutical supply chain. Preferential treatment for the UK in future US tariff decisions was also promised.
The White House confirmed that British-made Rolls-Royce engines would now enter the US without tariffs, boosting investor confidence. Wall Street reacted positively, with airline shares rising sharply.
More Deals Ahead Amid Global Trade Tensions
This agreement marks the first of many trade deals Trump plans to unveil soon. Commerce Secretary Howard Lutnick said dozens more are in the pipeline. However, the biggest hurdle remains the stalled US-China trade relationship, where tariffs over 100% still apply on both sides.
UK businesses hope this deal is just the beginning of a deeper trade relationship. The British-American Business group expressed disappointment over the continued 10% tariffs on UK exports but welcomed the progress made.
Post-Brexit, Starmer’s government is trying to balance trade ties with the US, EU, and China. With slow economic growth, securing market access is critical. British firms like Jaguar Land Rover paused exports to the US due to tariffs, while the UK government had to rescue British Steel to avoid collapse.
Although the short-term economic impact may be limited, experts agree that more trade deals like this one can help boost long-term growth. The UK also signed a free trade agreement with India earlier this week.
with inputs from Reuters