British PM Keir Starmer calls it a ‘historic day’ while Trump says it opens ‘a tremendous’ market for US
08 May 2025 - 19:09
by Alistair Smout, Andrew MacAskill and Andrea Shalal
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US President Donald Trump in the Oval Office at the White House in Washington, DC, the US, May 8 2025. Picture: REUTERS/LEAH MILLIS
London/Washington — US President Donald Trump and British Prime Minister Keir Starmer on Thursday announced a “breakthrough deal” on trade that leaves in place a 10% tariff on goods imported from the UK while Britain agreed to lower its tariffs to 1.8% from 5.1% 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 after 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 deal will reduce US tariffs on British auto imports to 10% from the current 27.5% according to a UK statement. The lower rate will apply to a quota of 100,000 British vehicles, almost the total exported to the US last year.
US tariffs on imports from the struggling UK steel industry will fall to zero from 25%, while British tariffs on US ethanol will fall to zero from 19%.
Both sides have agreed new reciprocal market access on beef — with UK farmers given a tariff-free quota for 13,000 tonnes. There will be no weakening of UK food standards on imports.
US commerce secretary Howard Lutnick said that Britain is expected to announce a purchase of $10bn worth of US-assembled Boeing aircraft, although a White House graphic referred to "aircraft parts." In turn, Lutnick said that the US will allow duty-free imports of Rolls-Royce jet engines.
Lutnick said that the deal would create $5bn in new annual export opportunities for American producers, while the new tariffs that stay in place would produce $6bn in annual new US revenue.
The US has been under pressure from investors to strike deals to de-escalate its tariff war after Trump’s often chaotic policymaking upended 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% tariff on most countries, along with higher rates for many trading partners that were then suspended for 90 days.
Britain’s Prime Minister Keir Starmer. Picture: ALBERTO PEZZALI/REUTERS
The US has also imposed 25% tariffs on cars, steel and aluminium, 25% tariffs on Canada and Mexico, and 145% tariffs on China. US and Chinese officials are due to hold talks in Switzerland on Saturday.
With the British 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, Britain had refused to lower its food standards, which are closely aligned with the EU. However, Britain’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.
Initial news of an announcement sent shares in luxury carmaker Aston Martin up 10%, while British 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 EU without moving so far towards one bloc that it angers the others.
Economists and one FTSE 100 CEO said the immediate economic impact of a tariff deal was likely to be limited but that trade agreements in general would help long-term growth. Britain struck a free-trade agreement with India this week.
There are also domestic political risks.
Polling shows the government remains deeply unpopular, making any move to cut taxes on multinational tech companies a big risk.
Britain’s digital service tax, levied at 2% of UK revenue for online marketplaces, search engines and social media platforms, was introduced in 2020 in response to an outcry about tax avoidance by big tech.
It was expected to raise about £800m this year, but companies such as Google and Amazon have passed the cost on to customers through ad surcharges and higher selling fees, respectively.
“The American, Indian and other deals we can do will be really important to the long-term economic health of the UK but don’t expect them to result in overnight euphoria,” the CEO said, speaking on condition of anonymity.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Trump announces ‘breakthrough’ trade deal with UK
British PM Keir Starmer calls it a ‘historic day’ while Trump says it opens ‘a tremendous’ market for US
London/Washington — US President Donald Trump and British Prime Minister Keir Starmer on Thursday announced a “breakthrough deal” on trade that leaves in place a 10% tariff on goods imported from the UK while Britain agreed to lower its tariffs to 1.8% from 5.1% 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 after 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 deal will reduce US tariffs on British auto imports to 10% from the current 27.5% according to a UK statement. The lower rate will apply to a quota of 100,000 British vehicles, almost the total exported to the US last year.
US tariffs on imports from the struggling UK steel industry will fall to zero from 25%, while British tariffs on US ethanol will fall to zero from 19%.
Both sides have agreed new reciprocal market access on beef — with UK farmers given a tariff-free quota for 13,000 tonnes. There will be no weakening of UK food standards on imports.
US commerce secretary Howard Lutnick said that Britain is expected to announce a purchase of $10bn worth of US-assembled Boeing aircraft, although a White House graphic referred to "aircraft parts." In turn, Lutnick said that the US will allow duty-free imports of Rolls-Royce jet engines.
Lutnick said that the deal would create $5bn in new annual export opportunities for American producers, while the new tariffs that stay in place would produce $6bn in annual new US revenue.
The US has been under pressure from investors to strike deals to de-escalate its tariff war after Trump’s often chaotic policymaking upended 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% 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% tariffs on cars, steel and aluminium, 25% tariffs on Canada and Mexico, and 145% tariffs on China. US and Chinese officials are due to hold talks in Switzerland on Saturday.
With the British 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, Britain had refused to lower its food standards, which are closely aligned with the EU. However, Britain’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.
Initial news of an announcement sent shares in luxury carmaker Aston Martin up 10%, while British 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 EU without moving so far towards one bloc that it angers the others.
Economists and one FTSE 100 CEO said the immediate economic impact of a tariff deal was likely to be limited but that trade agreements in general would help long-term growth. Britain struck a free-trade agreement with India this week.
There are also domestic political risks.
Polling shows the government remains deeply unpopular, making any move to cut taxes on multinational tech companies a big risk.
Britain’s digital service tax, levied at 2% of UK revenue for online marketplaces, search engines and social media platforms, was introduced in 2020 in response to an outcry about tax avoidance by big tech.
It was expected to raise about £800m this year, but companies such as Google and Amazon have passed the cost on to customers through ad surcharges and higher selling fees, respectively.
“The American, Indian and other deals we can do will be really important to the long-term economic health of the UK but don’t expect them to result in overnight euphoria,” the CEO said, speaking on condition of anonymity.
Reuters
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