Think

UK and US confirm trade deal to reduce Trump tarrifs

9 May 2025117 views0

U.S. President Donald Trump and UK Prime Minister Keir Starmer on Thursday unveiled a limited bilateral trade agreement that maintains key U.S. tariffs on British exports while modestly expanding market access in other areas.

The deal, described by both leaders as a “breakthrough,” is the first in a series of agreements the Trump administration hopes to secure in coming weeks, as part of an effort to reduce the $1.2 trillion U.S. goods trade deficit. Despite its significance, the agreement stops short of being a full-fledged free trade agreement and leaves several contentious issues unresolved.

While the agreement keeps the 10% U.S. tariff on British goods in place, it reduces average UK tariffs on U.S. exports from 5.1% to 1.8%, providing a partial reprieve to some American industries.

President Trump downplayed suggestions that the UK deal would serve as a model for other negotiations, emphasizing that countries with larger U.S. trade surpluses may face steeper tariffs.

From the Oval Office, Trump hailed the deal via speakerphone with Starmer, as U.S. Treasury Secretary Scott Bessent and trade chief Jamieson Greer prepared to begin talks with Chinese officials in Switzerland.

According to a UK official, while the deal started as a response to Trump’s tariffs, it has grown into a more substantial framework. However, it does not include an agreement on the UK’s 2% digital services tax—an issue Washington has raised but for which there is currently no path for resolution.

Key Provisions of the US-UK Economic Deal:

10% U.S. tariffs on British goods remain unchanged
UK tariffs on U.S. goods reduced to an average of 1.8%, down from 5.1%
Expanded U.S. agricultural access to UK markets (details not fully specified)
Lowered U.S. tariffs on British car exports
No agreement on restructuring the UK’s 2% digital services tax
Billed as a limited but expandable agreement, not a comprehensive free trade deal

“This is not a finished, classic ‘bells and whistles’ free trade agreement,” the UK official said. “We’ve done the Oval Office, now we’ve got more serious work to do.”

Unless otherwise linked, headlines are front page articles from 09/05/2025