President Donald Trump revealed on Thursday a preliminary trade agreement with the United Kingdom, marking the first formal deal since the introduction of his wide-ranging tariffs earlier this year. The agreement seeks to ease tensions caused by the tariffs while strengthening economic ties between the two historic allies.
Although not yet finalised, the deal outlines a mutual adjustment of tariffs and expanded market access. The United States will maintain a 10% tariff on most British imports, a baseline rate imposed by Trump in April as part of his “reciprocal” tariff strategy that aims to address perceived unfair trade practices.
However, tariffs on British automobiles will be reduced from 25% to 10% for the first 100,000 vehicles imported annually, with any additional vehicles subject to the higher 25% tariff. This change is expected to benefit UK car manufacturers such as Jaguar Land Rover and Rolls-Royce, which exported nearly 92,000 vehicles to the U.S. in 2024. Additionally, tariffs on British steel and aluminium will be removed entirely, offering relief to UK metal producers affected by previous U.S. duties.
In return, the UK has agreed to reduce or eliminate various non-tariff barriers that have limited American exports, particularly in agriculture. The agreement is projected to create a $5 billion opportunity for U.S. farmers and producers, including increased exports of ethanol worth $700 million and $250 million in beef and other agricultural products. The UK has also committed to purchasing $10 billion worth of Boeing aircraft, further cementing bilateral trade relations.
Both governments emphasised that the agreement will simplify customs procedures, improve U.S. companies’ competitiveness in UK public procurement, and establish high standards on intellectual property, labour rights, and environmental protections. A notable feature is the creation of a “new trading union” for steel and aluminium, designed to secure supply chains critical to both nations’ economic and national security interests.
UK Prime Minister Keir Starmer, who joined the announcement remotely, described the deal as a “fantastic platform” for future cooperation, highlighting its importance for British sectors such as automotive manufacturing and steel, which have been challenged by the tariffs. Speaking from the Oval Office, President Trump called the arrangement a “great deal for both countries.” The announcement coincided with the 80th anniversary of the Allies’ victory in Europe during World War II, a symbolic moment reinforcing the close alliance.
Despite the optimistic tone, experts have offered measured assessments. Some analysts view the deal as limited in scope, noting that the retention of the 10% tariff on most UK goods means it falls short of a comprehensive free-trade agreement. Others pointed out that the terms negotiated with the UK may be difficult to replicate with countries where the U.S. faces larger trade deficits.
The timeline for formalising the agreement remains uncertain, with officials from both countries expected to continue discussions in the coming months to finalise legal details and resolve outstanding issues. The UK government has expressed its intention to pursue further tariff reductions beyond the current framework.
Furthermore, the deal sets a precedent for future U.S. trade negotiations, with the Trump administration indicating that similar agreements with other countries are underway or forthcoming.