The US and the UK announced Thursday that they have reached transactions that reduce tariffs on some imports, including steel, automobiles and ethanol, and deepen economic ties between the two countries.
There have been many mutual blessings between President Trump in the oval office and the priority position of British Prime Minister Kiel, who dialed in on his speakerphone. “It's a really, really, really, really historic day,” Starmer said.
But as the dust settled, it became clear that this was merely a trading framework and there could be weeks, if not more, for additional negotiations before it was final. This is what we know.
It was the first trade deal since Trump increased tariffs.
Trump's rewrite of World Trade Playbook has shocked financial markets, and his administration is under pressure to reach trades to reduce uncertainty. Trump said the deal will be the first for many.
The Trump administration said it would open $5 billion worth of export opportunities for American businesses, while also bringing in $6 billion in tariff revenue.
But Trump said the final details are still in place, and British officials said negotiators will continue to reduce tariffs not included in the contract.
It's a narrow, focused transaction.
The deal will serve as a great bailout for the UK auto industry. It faces 10% tariffs on the first 100,000 cars exported annually to the US. According to Oxford Economics data, the UK sent 92,000 vehicles to the US in 2024.
British authorities warned that higher tariffs, which were around 25%, are at risk in the auto industry in the country that sent more than a quarter of car exports in the auto industry.
The UK will also be excluded from steel and aluminum duties. In exchange, it said it would increase the quota on beef imports from the US and remove tariffs on ethanol used in production.
The UK said it would receive “priority treatment” if further sectoral tariffs are introduced, such as drugs.
The two countries also have “high-level” economic security agreements and will work to build deeper partnerships on technology covering life sciences, quantum computing, biotechnology and other sectors.
There are still some unresolved questions.
The transaction is not final and neither side states that it could be effective. The UK government said it is still negotiating to defeat the 10% tariffs on most other goods.
UK Secretary of Business and Operations Jonathan Reynolds said it was a “groundbreaking breakthrough” but only reached “general terms” that sets up a process for more customs negotiations.
The British government can declare victory.
The contract could derail the line before it becomes effective. But for now, the UK is in a better position than it was a few weeks ago. As the country's automotive and steel industry is already struggling, efforts to strengthen its capacity to export to the important market, the United States, are welcome.
Previous agreements would also have hindered dealing with the European Union as the UK has not crossed the red line on lowering automobile or food safety standards. As several reports suggested, the UK did not reduce its own tariffs on cars. It also made no changes to the Digital Services Tax, which the Trump administration said had unfairly harmed the American tech giant. The tax was introduced in 2020 as a 2% obligation on revenue for search engines, social media services and online marketplaces, with most of the revenue coming from American companies such as Amazon and Google.
The Trump administration also won victory and has received praise from American ranchers for increasing beef exports, but it still needs no hormones. The National Beef Beef Association calls it a “risqué victory.”
But it's not an economic game changer.
Despite the agreement, exports of British goods generally face higher tariffs than they were two months ago, with the baseline 10% tariffs still in place.
And the UK's business relationship with the US is heavily distorted by services that are not affected by tariffs. Many economists have warned that, despite transactions, the UK economy is vulnerable to global economic uncertainty.
To reduce that uncertainty, the Trump administration needs to ensure more transactions with other countries and make trade policies more predictable.
Anna Swanson Contributed with a report from Washington.
