US President Donald Trump and UK Prime Minister Keir Starmer have announced a “breakthrough deal” on trade that leaves in place a 10 per cent tariff on goods imported from the United Kingdom while the UK agreed to lower its tariffs to 1.8 per cent from 5.1 per cent and provide greater access to US goods.
The agreement announced by Trump from the Oval Office marked the first since Trump triggered a global trade war with a barrage of levies on trading partners following his return to the White House in January.
“It opens up a tremendous market for us,” Trump said.
“This is a really fantastic, historic day,” Starmer said by teleconference.
The United States has been under pressure from investors to strike deals to de-escalate its tariff war after Trump’s often chaotic policymaking up-ended global trade with friends and foe alike, threatening to stoke inflation and start a recession.
Top US officials have engaged in a flurry of meetings with trading partners since the president on April 2 imposed a 10 per cent tariff on most countries, along with higher rates for many trading partners that were then suspended for 90 days.
The US has also imposed 25 per cent tariffs on autos, steel and aluminium, 25 per cent tariffs on Canada and Mexico, and 145 per cent tariffs on China.
US and Chinese officials are due to hold talks in Switzerland on Saturday.
With the UK economy struggling to grow, the tariffs had added to the pressure on his government.
Jaguar Land Rover paused its shipments to the US for a month and the government was forced to seize control of British Steel to keep it operating.
While seeking a deal with the US, the UK had refused to lower its food standards, which are closely aligned with the European Union.
However, the UK’s farming trade union has said that some US producers who do not use growth hormones or antimicrobial washes could be given greater market access.
The status of the 10 per cent “baseline” tariff was unclear, as was a threatened tariff on the pharmaceutical industry which could damage AstraZeneca and GSK.
Initial news of an announcement sent shares in luxury car maker Aston Martin up 10 per cent while UK retailers with operations in the US including JD Sports and Primark owner AB Foods also rose.
Starmer’s government has been seeking to build new trading relationships post-Brexit with the US, China and the European Union without moving so far towards one bloc that it angers the others.
Economists and one FTSE 100 chief executive said the immediate economic effect of a tariff deal was likely to be limited but that trade agreements in general would help long-term growth.
The UK struck a free trade agreement with India this week.
