Trump Announces Trade Deal with UK, Signals More Agreements to Come

President Donald Trump on May 8 outlined a prospective trade agreement with the United Kingdom, marking the first deal since his April 2 tariff plans. While no formal agreement was signed, Trump highlighted that the UK will reduce or eliminate non-tariff barriers against U.S. exports. The UK’s tariff rate on U.S. goods will drop from 5.1% to 1.8%, though the 10% U.S. baseline tariff on UK goods will remain.
British Prime Minister Keir Starmer, speaking after a phone call with Trump, emphasized that this is just the start of broader trade negotiations. The deal includes lowering U.S. tariffs on UK automobiles from 27.5% to 10% and removing tariffs on steel and aluminum. A quota of 100,000 UK vehicles exported to the U.S. at a 10% levy will also be established.
The UK’s economy, heavily reliant on trade with the U.S., welcomed the deal. Bank of England Gov. Andrew Bailey expressed hope for further agreements, though he cautioned that the UK remains exposed to U.S. tariffs on other nations. Unlike the EU and Canada, the UK has avoided retaliatory tariffs, focusing instead on mitigating the impact of existing levies.
U.S.-UK trade totaled approximately $400 billion in 2024, with the U.S. recording a $11.9 billion goods trade surplus. The agreement comes as U.S. markets react to trade policy developments, with portfolio manager Charlie Ashley noting that trade outcomes will drive market direction. The Federal Reserve has signaled stagflation risks, adding to the economic uncertainty.
This deal signals a new chapter in U.S.-UK trade relations, with Trump promising more agreements to follow.

Published: 7/2/2025