U.S.-U.K. Trade Deal to Build on
Close Ties but Leave Some Tariffs in Place
Much of the agreement President Trump unveiled
Thursday still needs to be negotiated, but the administration said the deal with
one of America’s closest allies would be the first of many.
·
Britain’s
dropping its tariffs on U.S. beef, ethanol, sports equipment and other products,
and buying $10 billion of Boeing airplanes. The United States in return said it
would pare back tariffs that Mr. Trump has put on cars and steel, though it will
leave a 10 percent levy in place for all British exports.
·
Britain
to reconsider a tax on technology companies
·
U.S.
officials have been negotiating with India, Israel, Japan, South Korea and Vietnam,
among other trading partners, for agreements that would drop tariffs between the
countries.
·
Trump
officials are also headed to Geneva this weekend to discuss trade issues with Chinese
officials
·
Mr.
Trump, who is fixated on trade deficits, has also praised the country for having
relatively balanced trade with the United States. Last month, the president imposed
the same 10 percent global tariff on Britain that he put on other countries, but
not the higher “reciprocal” tariffs that were applied to many countries that ship
the United States more products.
·
That
their plans would leave the 10 percent tariff on British exports in place but roll
back others that Mr. Trump has put on cars and steel. In return, Britain would offer
billions of dollars of market access for American beef and other exports.
·
Hefty
tariffs Mr. Trump applied to automotive imports, which threatened British companies
like Jaguar Land Rover and Aston Martin.
·
Under
the terms of the new arrangement, Britain will be allowed to send 100,000 vehicles
to the United States under a tariff of 10 percent. The British government said that
any cars shipped beyond that level would face a 27.5 percent tariff, and that U.S.
tariffs on British steel would fall to zero.
·
Paul
Ashworth, the chief North America economist for Capital Economics, wrote in a note
that “the ‘full and comprehensive’ trade deal between the U.S. and the U.K. announced
in a rush today by President Donald Trump and PM Keir Starmer is no such thing.
·
Britain
is the United States’ 11th-largest trading partner in goods, representing 2.9 percent
of total U.S. trade in the first quarter of the year. The United States sent $80
billion of machinery, airplanes, natural gas, crude oil and other products to Britain
in 2024, while it bought $68 billion of cars, pharmaceuticals and other goods in
return.
·
The
United States is Britain’s largest single trading partner, though most of that trade
relationship is in services, which are not affected by tariffs.
·
British
resistance to America’s chemically treated beef and chicken, as well as fears that
the United States would push for American companies to gain deeper access to Britain’s
National Health Service.
·
British
officials made clear to the Trump team they wanted to be the first country to make
a deal.
·
Mr.
Trump also engaged directly with Mr. Starmer, including putting in an 11th hour
call to push for more in the agreement, the British prime minister said Thursday.
·
Mr.
Trump also engaged directly with Mr. Starmer, including putting in an 11th hour
call to push for more in the agreement, the British prime minister said Thursday.
·
More
contentious issues, like opening Britain’s health care market to U.S. companies,
or the digital service tax that Britain has imposed on American tech firms.
·
Matt
Blunt, the president of the American Automotive Policy Council, which represents
Ford, General Motors and Stellantis, said his group was “very disappointed” that
the administration had prioritized Britain over Canada and Mexico, which remain
subject to 25 percent automotive tariffs and buy far more from U.S. factories.
·
It would
now be cheaper, Mr. Blunt said, to import a car from Britain than one from Mexico
or Canada that might source half its parts from the United States.
President
Trump announced on Thursday that the United States intended to sign a trade deal
with Britain that would bring the two nations closer and roll back some of the punishing
tariffs he issued on that country’s products.
Both
sides consider a trade pact deeply beneficial, and a deal has been under discussion
since Mr. Trump’s first term. But the announcement on Thursday was scant on details,
reflecting the haste of the Trump administration’s efforts to negotiate with more
than a dozen nations and rework the global trading system in a matter of months.
The
agreement, which Mr. Trump said would be the first of many, would include Britain’s
dropping its tariffs on U.S. beef, ethanol, sports equipment and other products,
and buying $10 billion of Boeing airplanes. The United States in return said it
would pare back tariffs that Mr. Trump has put on cars and steel, though it will
leave a 10 percent levy in place for all British exports.
Neither
government has said when they expect the agreement to be finalized. A document released
by the Trump administration on Thursday evening listed half a dozen general priorities,
and said the countries would immediately begin negotiations “to develop and formalize”
them.
The
British government said it was still pushing to bring down the 10 percent tariff
on most other goods. American officials said they would push Britain to reconsider a tax on technology companies. Officials
from both governments will need to meet in the coming months to hammer out more
specific language, leaving open the potential for disagreements.
Both
British and American businesses, including U.S. cattle ranchers and dairy farmers,
also praised the arrangement, though some lamented that tariffs between the two
countries would remain higher than they were when Mr. Trump came into office.
The
announcement comes as the United States races to finalize agreements with more than
a dozen other countries eager to avoid Mr. Trump’s high tariffs. U.S. officials have been negotiating with India, Israel, Japan,
South Korea and Vietnam, among other trading partners, for agreements that would
drop tariffs between the countries.
Trump officials are also headed to Geneva
this weekend to discuss trade issues with Chinese officials, amid an intense standoff that has shut
off U.S. trade with China and is threatening to put many companies out of business.
Amid
the festering disputes with many countries, closer ties with Britain appeared to
be low-hanging fruit for the Trump administration. British officials have eyed an
agreement with the United States since leaving the European Union in 2020 as a way
to offset reduced trade with Europe, and Mr. Trump has pushed for a deal with Britain
since his first term.
One
of the most contentious issues for Britain in recent months has been the hefty tariffs Mr. Trump applied to automotive imports, which
threatened British companies like Jaguar Land Rover and Aston Martin.
Under the terms of the new arrangement, Britain
will be allowed to send 100,000 vehicles to the United States under a tariff of
10 percent. The British government said that any cars shipped beyond that level
would face a 27.5 percent tariff, and that U.S. tariffs on British steel would fall
to zero. Britain sent 92,000
vehicles to the United States in 2024, according to data from Oxford Economics.
U.S.
firms in turn will gain more ability to sell to the British government, and streamlined
customs procedures when selling into Britain, according to a White House fact sheet.
In addition, the governments said they will cooperate on issues of economic security,
like enacting global technology controls and setting up a secure supply chain for
important products like steel and pharmaceuticals.
U.S.
officials hope the announcement will send a message to other American trading partners
that if they agree to open up their markets, they too could see some of the tariffs
Mr. Trump has applied rolled back.
Mr.
Trump’s defenders have praised his deal-making ability and said that the global
tariffs he has issued have given him extraordinary leverage over other countries.
Critics have painted the president as increasingly desperate to solve a crisis of
his own making, as tariffs begin to push up U.S. prices and dampen the economy.
The
National Cattlemen’s Beef Association, which represents ranchers, praised the Trump
administration for expanding U.S. access to the British market.
“With this trade deal, President Trump has delivered
a tremendous win for American family farmers and ranchers,” said Buck Wehrbein, a Nebraska cattleman who heads the group.
Other
analysts were less impressed. Paul Ashworth, the chief North
America economist for Capital Economics, wrote in a note that “the ‘full and comprehensive’
trade deal between the U.S. and the U.K. announced in a rush today by President
Donald Trump and PM Keir Starmer is no such thing.”
“This
rush to demonstrate progress on ‘deals’ reveals a rising desperation within the
administration to roll back tariffs before they hit G.D.P. growth and inflation,”
Mr. Ashworth added.
The
Trump administration notified Congress of its intent to negotiate a trade deal with
Britain back in 2018. But the talks never got much traction in Mr. Trump’s first
term because of British resistance to America’s chemically
treated beef and chicken, as well as fears that the United States would push for
American companies to gain deeper access to Britain’s National Health Service.
During
the Biden administration, British officials continued to advocate a trade deal but
did not make much progress because of Democrats’ skepticism.
In
late February, at a party at the British ambassador’s residence in Washington, Mr.
Starmer, who was visiting, told Commerce Secretary Howard Lutnick
of Britain’s interest in focusing on trade, according to a person with knowledge
of the conversation. Mr. Lutnick, who oversees a portfolio
that includes U.S. trade policy, connected with his counterpart in the U.K. government,
Jonathan Reynolds. British officials made clear to the Trump
team they wanted to be the first country to make a deal.
Mr.
Trump’s special envoy to Britain, the former producer of his show “The Apprentice,”
Mark Burnett, was involved in the early discussions and was a proponent of trying
to secure an early deal with the country.
With
Mr. Lutnick focusing on the big picture and Jamieson Greer,
the U.S. trade representative, working through the details and execution, the governments
hammered out a framework. Mr. Trump also engaged directly
with Mr. Starmer, including putting in an 11th hour call to push for more in the
agreement, the British prime minister said Thursday.
Mr.
Trump liked the idea of Britain being his first partner, given the country’s special
relationship with the United States, and he thought the agreement would send a good
signal to the world, according to a person with knowledge of his thinking. Britain
is also not a major source of automobiles or steel for the United States, which
helped persuade American officials to drop the tariffs on those products.
The
announcement also provides Mr. Starmer a much-needed political victory, appearing
to vindicate his strategy of cultivating a relationship with Mr. Trump.
But
some analysts have noted that the agreement left many tariffs in place and skipped
over more contentious issues, like opening Britain’s health
care market to U.S. companies, or the digital service tax that Britain has imposed
on American tech firms. They suggested that trade talks with other governments
that are less closely allied with the United States could be tougher to finalize.
“If
we’re 40 days out from Liberation Day, and the first deal and the only deal is with
a country where we run a bilateral trade surplus that was not seen as a problem
coming into Liberation Day, I take it as a kind of bearish signal about how difficult
the next deals are going to be,” said Josh Lipsky, the chairman of international
economics at the Atlantic Council, a think tank. He referred to Mr. Trump’s term
for April 2, when the president rolled out his tariff plan. He later paused most
of the tariffs for 90 days.
Other
industry executives expressed nervousness about the precedent that rolling back
tariffs on foreign steel, aluminum and cars might set
for other negotiations, or complained about the concessions being unfair for U.S.
industry.