Markets rose today after a new U.S.-U.K. trade deal was announced by President Donald Trump and Prime Minister Keir Starmer. Though many details remain TBD, the news brought reassurance and clarity to an important trade relationship between the U.S. and a top ally. It’s also the start of what’s expected to be more deal-making ahead. So what was agreed upon, exactly?
For one, U.K. automakers found relief in today’s deal — their tariffs will go down from 25% to 10% on the first 100,000 vehicles exported to the U.S., according to the announcement.
“The U.S. is a big customer of U.K. cars. So those 25 percent tariffs were a big concern,” said Christopher Salmon. He runs the U.K.-based trade consultancy clearBorder.
Tariffs on U.K. steel and aluminum also caught a break. Still, the 10% baseline tariffs remain.
“This is the qualification when we say, you know, relief rather than elation, because, you know, prior to that, the average tariff was about 2.5%,” Salmon said.
Many details remain to be hashed out. Thursday, U.S. officials boasted this agreement would grow the market in the U.K. for U.S. agricultural products like ethanol and beef. But the topic of U.S. meats opens up a whole can of worms, said Eric Golson with the University of Surrey in the U.K.
“You can't have American beef with lower standards circulating in the U.K.,” he said.
He said the U.K. is subject to very specific health laws against things like genetically modified organisms and washing chicken in chlorine.
Meanwhile, the real meat of the U.S.-U.K. trade relationship is financial and business services said Dan Hamilton with the Brookings Institution.
“U.S.-U.K. services trade is much more important, frankly, than goods trade. And yet, there's no mention of this,” he said.
All of this is why Gary Hufbauer with the Peterson Institute for International Economics qualifies today’s announcement as more of a teaser versus a substantial agreement:
“The biggest single thing is that there's an announcement at all, whatever the content is, because it shows the some reversal of Trump's extreme tariff agenda.”
He said it may not be robust or detailed, but that a deal was made at all is a positive signal.
