A highly anticipated trade deal was struck this morning between the US and UK…sort of.
“I’m thrilled to announce that we’ve reached a breakthrough trade deal with the United Kingdom,” President Trump announced in the Oval Office this morning, while Prime Minister Keir Starmer called it a “great deal for both countries” via speakerphone.
Here’s what the UK and US have agreed on so far:
- The US’ 10% baseline tariff on British goods will remain in place.
- The UK will make it easier for the US to export some chemical, energy, agricultural, and industrial products such as beef, ethanol, and machinery.
- UK auto manufacturers will be allowed to export 100,000 cars into the US under a 10% tariff instead of the previous 27.5% levy, though any additional vehicles face a 25% tariff.
- Rolls-Royce engines will be imported without tariffs at all, and the UK will purchase $10 billion worth of Boeing planes.
However, key details are still fuzzy. For example, the UK government said today in a statement that US steel and aluminium tariffs on the UK will go down to zero, while the White House put out its own statement saying the two nations “will negotiate an alternative arrangement” on the metal levies.
Some economists expressed skepticism about the lukewarm deal. After all, the UK only accounts for 3% of US trade, University of Michigan economist Justin Wolfers pointed out. “It's a photo op, with little macroeconomic significance."
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Zoom out: The UK and US already have relatively even trade, making this deal a lighter lift for the White House. The US exported $80 billion worth of planes, oil, and other products to the UK in 2024, while the US imported $68 billion worth of cars, pharmaceuticals, and other goods from Britain that year.
Who are the winners and losers?
One group left out in the cold is Silicon Valley tech behemoths such as Alphabet, Meta, and Amazon. The new deal keeps a digital services levy that taxes 2% of revenue earned in Britain by these companies in place.
But the trade deal is great news for some British exporters, including high-end automakers like Rolls-Royce, pharma giant AstraZeneca, and aerospace firm BAE Systems.
Hope ahead: Even though today’s deal wasn’t exactly the fully fleshed-out agreement Trump promised, investors didn’t seem to mind. It’s being taken as an indication that Trump may finally be warming up to the idea of making deals with other nations that are bigger trading partners, like China. US and Chinese negotiators plan to meet in Geneva this weekend, Treasury Secretary Scott Bessent revealed earlier this week.
At least one person seems positive that more good news lies ahead. “You better go out and buy stock now,” President Trump declared.—LB