UK to Secure First Post-Tariff Trade Deal with U.S.

The United Kingdom is set to become the first nation to strike a trade agreement with the United States aimed at reducing tariffs imposed during the Trump administration’s global trade war. The deal, expected to be officially announced on Thursday, will primarily lower U.S. tariffs on British steel and automobiles.

Former U.S. President Donald Trump, in posts on Truth Social, revealed that he would host a press conference at 10 a.m. EDT in the Oval Office to unveil what he described as a “full and comprehensive” trade pact with Britain. British Prime Minister Keir Starmer is also scheduled to provide an update on the agreement, which is anticipated to be limited in scope but symbolically significant.

“Because of our long-time history and allegiance together, it is a great honor to have the United Kingdom as our FIRST announcement,” Trump said, noting that more trade deals were in progress.

The agreement comes as investors and international observers push the U.S. to resolve tariff disputes that have disrupted global supply chains and fueled inflation risks. Since April 2, Trump’s 10% baseline tariff on imports from most countries—alongside elevated rates on China, Canada, Mexico, and others—has drawn international scrutiny.

While the U.S. has levied 25% tariffs on steel, aluminum, and autos, it also imposed a staggering 145% tariff on Chinese imports, with further negotiations scheduled between U.S. and Chinese officials in Switzerland this Saturday.

The UK’s luxury carmakers have borne the brunt of these tariffs. Jaguar Land Rover temporarily paused U.S. exports to reassess its supply strategy, while Aston Martin opted to pass on some costs to customers, leading to an 8% surge in its shares.

According to British officials, the deal will likely include reduced tariffs on a specific volume of steel and auto exports. In exchange, Britain is expected to remove its digital services tax—a 2% levy on revenue from online platforms, which has impacted major U.S. tech firms.

Despite maintaining EU-aligned food safety standards post-Brexit, UK officials noted that some American producers already meet these requirements, potentially paving the way for limited U.S. agricultural imports.

Prime Minister Starmer, elected in July, is strategically navigating Britain’s post-Brexit trade landscape—balancing ties with the U.S., EU, and China. Domestically, his government faces mounting political pressure, with public discontent over tax hikes and reduced energy bill support. Eliminating the digital services tax, which is projected to generate £800 million ($1.1 billion) in 2024, may spark political backlash.

The broader economic impact of the U.S.-UK tariff deal is expected to be modest in the short term. However, analysts see long-term gains, especially when combined with Britain’s other recent trade agreements, including one with India.

“Deals with the U.S., India, and others will be crucial to the UK’s long-term economic health, but don’t expect overnight results,” a FTSE 100 CEO noted.

Economists like JPMorgan’s Allan Monks added that the benefits of the agreement could remain limited unless the broader 10% baseline tariffs are rolled back.

“With balanced trade and no looming threats of retaliation, the UK may have little leverage left to expand this agreement further,” Monks observed.

This development marks a pivotal step in reestablishing transatlantic trade relations and could set the tone for future global tariff negotiations.