U.S. President Donald Trump announced an agreement with the U.K. to lower tariffs and increase trade between the two countries. It’s been hailed as the first trade deal since Trump imposed worldwide tariffs in April.
He has promised more deals to come, and Prime Minister Mark Carney said after his visit with Trump this week that trade would be the subject of much negotiation between Canada and the U.S. in the coming months.
The U.K. is a far smaller trading partner to the U.S. than Canada. But today’s announcement could offer clues to what Trump might do in other deals.
First of all, it hasn’t been finalized
Both Trump and U.K. Prime Minister Keir Starmer hailed their agreement as a “great deal,” making it easy to believe it’s been signed, sealed and delivered. But not quite.
Trump acknowledged this in his announcement. “The final details are being written up,” he told reporters. “In the coming weeks, we’ll have it all very conclusive.”
So could it change? There’s no indication of that. But so far it isn’t final. Normally, formal trade deals need to be approved by Congress. It’s not clear whether this counts as a formal trade deal. And as Trump has shown time and again, he changes his mind.
The United States and Great Britain announced plans for a trade deal on Thursday, that is expected to lower the financial burden on the U.K. of U.S. President Donald Trump’s sweeping tariffs. The deal, which is not yet finalized, will touch on everything from U.K. autos and steel to American beef.
What does the U.K. get?
The big win is on autos. Last month, the Trump administration imposed a 25 per cent tariff on all foreign cars going to the U.S. (in addition to a previous tariff, which for the U.K. was 2.5 per cent). The U.K. has been desperate to get that changed or, ideally, eliminated.
The U.S. is the largest destination for British cars, accounting for more than a quarter of U.K. auto exports in 2024, according to the Office for National Statistics.
Jaguar Land Rover stopped shipping vehicles to the U.S. on April 7 in response to the tariffs. But the company resumed those shipments about a week ago.
Thursday’s agreement allows the U.K. to send a maximum of 100,000 vehicles to the U.S. at a lower tariff rate of 10 per cent. That’s about the same number of cars the U.K. sent to the U.S. last year.
Starmer underlined the importance of that by visiting at Jaguar Land Rover plant near Birmingham today.
In what appears to be another win, 25 per cent tariffs on steel and aluminum will be dropped.
What does the U.S. get in return?
The president said the agreement would lead to more beef and ethanol exports to the U.K.
But other agricultural products are not included. The U.K. and Europe have long maintained food standards that prevent U.S. chicken and other products from being sent there.
“We had red lines. Standards in agriculture, we kept to those,” said Starmer.
Trump’s commerce secretary, Howard Lutnick, said U.S. companies will have have expanded access to U.K. markets, potentially worth $5 billion. He said the U.K. will now buy some products from the U.S. that it had previously imported from other countries.
How out of whack is trade between the U.K. and the U.S.?
It isn’t, and Lutnick said as much: “We have balanced trade with the U.K.” In fact by some measures, the U.K. actually has a small trade surplus.
Despite this, Trump slapped the U.K. (and almost every other country) with a 10 per cent “baseline” tariff in April.
That is not going away with this agreement. And Trump suggested this was favourable treatment, warning other countries not to expect the same in future negotiations. “That’s a low number,” Trump said.
