Trump announces U.S. trade deal with Britain, says ‘final details’ still to come

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The United States and Britain have reached a narrow trade agreement that cuts tariffs on U.S. imports of British cars, steel, and aluminum, but leaves the U.K. facing 10-per-cent tariffs on most exports.

U.S. President Donald Trump and British Prime Minister Keir Starmer announced the agreement with great fanfare on Thursday and insisted it will offer benefits to both countries.

“With this deal, the U.K. joins the United States in affirming that reciprocity and fairness is an essential and vital principle of international trade,” Mr. Trump said from the White House as Mr. Starmer listened by phone from the U.K.

“This is a really fantastic, historic day,” Mr. Starmer said in response.

Although there were scant details, the announcement will be studied closely by officials in Ottawa and other world capitals as they seek relief from similar tariffs introduced by Mr. Trump last month.

Under the agreement, the U.S. will eliminate its 25-per-cent tariff on imports of British steel and aluminum. The U.S. will also cut its tariff on British cars from 25 per cent to 10 per cent, but only on 100,000 imported vehicles per year. The U.K. and U.S. will each improve market access for beef imports and the U.K. will remove tariffs on ethanol. The U.S. will also have preferential access to some U.K. aerospace components.

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The agreement was the first major announcement by Mr. Trump since he unveiled sweeping tariffs in April on imports from dozens of countries, only to back off on some and change others. He had been saying for weeks that as many as 80 countries were eager to sign trade deals with the U.S.

“Today’s action also sets the tone for other trading partners to promote reciprocal trade with the United States,” the White House said in a statement Thursday.

The deal will be a boost for Mr. Starmer, who has faced a rocky first year in office and saw his Labour Party suffer huge defeats in local elections in England last week. Earlier this week, he signed a comprehensive trade deal with India, and he has started negotiating new trading arrangements with the European Union.

“This is a deal that will protect British businesses and save thousands of jobs in Britain, really important, skilled, well-paid jobs,” Mr. Starmer said Thursday during a visit to a Jaguar Land Rover car plant in Solihull, England. He added that he hoped the U.S. and U.K. could negotiate a broader pact.

The Prime Minister’s supporters will view the announcement as a vindication of his approach to Mr. Trump. He has not openly criticized the President’s global trade war or announced any countertariffs. Instead, he has used flattery and extended an invitation to Mr. Trump from King Charles III for a state dinner next fall.

Britain was among the few countries not singled out by the U.S. President for harsher tariffs in April, but the U.K. was still hit with a 25-per-cent tax on vehicles, steel and aluminum, as well as a 10-per-cent baseline charge on all other exports.

Thursday’s deal leaves the U.K. in a largely worse position than before Mr. Trump launched his trade war.

The deal effectively caps British vehicle exports to the U.S. at the current level of 100,000 since any shipments over that amount will be subject to the 25-per-cent levy. And the baseline U.S. tariff of 10 per cent remains in place. Prior to April, U.S. duties on British imports were around 3 per cent.

Nonetheless, the agreement was welcomed by many British business groups.

“A clear message is being sent to the international community: the U.K. is a fierce advocate of free and fair trade and a reliable partner with whom to do business,” said Rain Newton-Smith, chief executive of the Confederation of British Industry.

“This deal will be met with a huge sigh of relief by many British businesses,” said Shevaun Haviland, director general of the British Chambers of Commerce.

Britain has been desperate for a comprehensive trade deal with the U.S. ever since the U.K. left the European Union in 2020. One of the benefits of Brexit, supporters said, was that leaving the EU would allow Britain to pursue its own trade policy. A deal with the U.S. was seen as a major prize, but it has remained elusive partly over disagreements about agricultural products, in particular U.S. chlorinated and hormone-treated beef and chicken.

On Thursday, Mr. Starmer said that British food safety standards have not been compromised by the trade announcement. However, some farm groups have expressed concern that U.S. beef imports may not meet British requirements.

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Britain and the U.S. enjoy a relatively balanced trade relationship, with neither country running a surplus in the exchange of goods. The trade in goods is worth around £113.7-billion annually, or $210.4-billion. However, trade in services – such as financial services and tourism – is far larger at £179-billion and Britain has a surplus with the U.S.

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Britain’s single largest export to the U.S. is vehicles, which total around £9-billion annually. Jaguar is the country’s largest car exporter and it recently announced a pause in U.S. sales because of Mr. Trump’s tariffs.

While the U.S. is one of Britain’s largest single export markets, the U.K.’s trade with the EU is far larger. The EU accounts for roughly half of all British exports and imports, and Britain’s trade in goods alone with the EU is four times larger than the U.S.

The EU has taken a more aggressive response to Mr. Trump and on Thursday the European Commission announced a series of proposed retaliatory levies on U.S. imports.

“The EU remains fully committed to finding negotiated outcomes with the U.S.,” Commission President Ursula von der Leyen said in a statement. “At the same time, we continue preparing for all possibilities.”