By Natalie Andrews and Max Colchester
WASHINGTON -- President Trump announced the outlines of an agreement on trade with the U.K. on Thursday, the first in what the White House hopes will be a series of deals in the wake of U.S. tariffs imposed on allies and adversaries alike.
"It's very conclusive and we think everyone's going to be happy," Trump said. "Many countries want to make a deal, and many countries are very unhappy that we happened to choose this one," he said.
The pact, which appeared to have been put together hastily by U.S. and British officials, is fairly limited in scope. The Trump administration agreed to roll back tariffs imposed on British steel and automobiles in exchange for purchasing Boeing jets and giving American farmers greater access to U.K. markets.
Under the deal, most U.K. goods will still be subject to the global 10% tariff the U.S. imposed on all countries in April. But U.K. steel and aluminum will be exempt from the U.S.'s 25% levy and U.K. car tariffs will be lowered to 10% from 25% for the first 100,000 vehicles.
In return, the U.K. is cutting tariffs on some U.S. beef imports from 20% to zero. The U.K. will also cut tariffs on ethanol. U.K. officials say that they are continuing to negotiate with Trump officials to reduce the baseline 10% tariffs the U.S. imposed. U.K. officials said the legal framework for the tariff reductions had yet to be signed.
The agreement, launched with great fanfare in the Oval Office and with U.K. Prime Minister Keir Starmer dialing in, fell well short of a full trade deal that the U.K. has wanted for years. But it allows the U.S. president to show progress in getting something in return for the hike in tariffs that have spooked financial markets and added to growing gloom about the economy, including worries about higher consumer prices that have hurt the president's approval ratings.
U.S. stock indexes hit their highs for the day as Trump highlighted the deal's benefits and said he expected further trade deals with other allies to be struck in coming days and weeks. He also spoke of coming tax cuts, which still face hurdles in getting through Congress, as getting the economy "zooming."
"This is going to boost trade between and across our countries," Starmer said. "Donald, thank you so much."
In a sign of how eager Trump was for a win in the trade conflicts, he called Starmer late Wednesday to finalize the details. The prime minister was watching his favorite soccer team Arsenal play a crucial European game at the time, according to Starmer, who said he hadn't planned to announce a trade deal on Thursday.
The U.K. ambassador to the U.S., Peter Mandelson, referenced the call during the Oval Office announcement, saying the U.K. leader was happy to get the late night call. Like the gathered U.S. officials, Mandelson praised Trump's negotiating abilities.
Commerce Secretary Howard Lutnick, speaking from the Oval Office, said: "We've opened up new market access -- ethanol, beef, machinery, all the agricultural products they've agreed to open their markets and that will add $5 billion of opportunity to American exporters."
On potential U.S. pharmaceutical tariffs, which the Trump administration is weighing, the U.K. was promised "significantly preferential treatment whatever happens in the future," said Starmer. Peter Navarro, a top trade adviser to Trump, said that the U.S. was also still in negotiations about the U.K.'s tax on digital services, which affects American tech giants like Google and Amazon. "That's a very big deal to President Trump," he told reporters.
Financial markets and other countries are watching the deal's details closely for signs of the Trump administration's thinking and willingness to strike similar deals with other countries.
The framework is also likely to send a signal to other world leaders over how best to deal with the U.S. president. Starmer has avoided confrontation with Trump over tariffs and the Ukraine war, and instead offered the U.S. leader an unusual second state visit to Britain, including a signed invitation from King Charles. Other countries like China have taken a far more confrontational approach.
Holger Schmieding, chief economist at Berenberg, a German bank, said the deal offers hope for "a series of deals to contain the damage from the Trump trade wars, which otherwise would hit U.S. consumers and U.S. businesses very hard."
But he said the deal is "almost irrelevant for the U.S. because there are not that many U.S. goods imports from the U.K. -- the U.S. imports almost nine times as many goods from the European Union than it does from the U.K."
The EU said earlier Thursday it could target American cars, car parts, airplanes and other products with tariffs if negotiations with the U.S. break down, and released a list of American products, valued at about $107 billion, that it says could face tariffs. "Any country which retaliates against the United States, which is simply trying to get fairness, is making a grave mistake," Navarro said, adding that it would hurt effective negotiations.
Striking a deal with the U.K. could be far easier than other countries. That is because both sides have a fairly balanced trading relationship, while the U.S. has a large trade deficit with many other countries.
The U.S. ran a goods trade surplus of $11.9 billion with the U.K. in 2024, according to Census Bureau data. Total trade in goods between the two nations equaled $148 billion, making the U.K. as America's ninth largest trading partner -- behind Vietnam and ahead of India.
Trump has paused sweeping tariffs on dozens of countries to allow for negotiations but has kept the 10% baseline tariff in place, as well as severe levies on Chinese imports, which have already led to some consumer-price increases on a variety of goods, including baby strollers, cribs and toys. The president has played down price concerns, saying last week that "maybe the children will have two dolls instead of 30." At the same time, Trump's unpredictable trade announcements have made investors nervous and pushed major stock indexes lower.
Treasury Secretary Scott Bessent has said his priorities include striking trade deals with countries in Asia. Bessent and U.S. Trade Representative Jamieson Greer are traveling to Switzerland on Thursday to meet Beijing's lead economic representative, the first direct talks over trade between senior officials on both sides.
Trump on Thursday expressed optimism about those talks, suggesting the tariffs could come down and trade could increase between the two nations. "We're going to see. Right now you can't get any higher. It's at 145% so we know it's coming down," Trump said.
The president alluded to diplomatic gamesmanship over who reached out first. "Who made the first call, who didn't...doesn't matter," Trump said. "Only matters what happens in that room."
Write to Natalie Andrews at natalie.andrews@wsj.com and Max Colchester at Max.Colchester@wsj.com
(END) Dow Jones Newswires
May 08, 2025 15:38 ET (19:38 GMT)
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