WASHINGTON — On Thursday, President Donald Trump consented to slash tariffs on British automobiles, steel, and aluminum in an impending trade agreement. However, he downplayed the possibility of extending similar tariff reductions to other nations, whose economies are feeling the strain of his import levies.
According to the preliminary agreement, the United Kingdom will increase its purchases of American beef and ethanol while also simplifying its customs procedures for U.S. imports. Nonetheless, the initial 10% tariffs on British products will remain, with the potential for other countries to face even steeper tariffs due to trade imbalances with the U.S. “That’s a low number,” Trump remarked regarding the U.K.’s 10% rate, implying that countries deemed to have been unfair to the U.S. in trade would encounter higher tariffs.
This announcement marks a political success for U.K. Prime Minister Keir Starmer and lends some credibility to Trump’s claim that his unorthodox trade policies may help reshape the global economic landscape in favor of the U.S. Although the deal improves Britain’s stance since the imposition of new tariffs by Trump, the global economy remains entangled in the uncertainty wrought by his trade practices. Given the U.K.’s modest role in U.S. imports, the agreement with Britain is only a minor move toward addressing trade issues globally.
Speaking from the Oval Office, Trump emphasized the framework’s importance, though finalizing the details is pending. “In the coming weeks, we’ll have it all very conclusive,” he projected. He noted that the agreement would boost exports of U.S. beef and ethanol to the U.K. while easing customs procedures for American goods.
Commerce Secretary Howard Lutnick confirmed the retention of the baseline 10% tariff and that an unnamed British company plans to purchase $10 billion worth of aircraft from Boeing.
For British officials, Trump’s car tariffs would reduce from 27.5% to 10% on a specific number of vehicles, while steel and aluminum tariffs would be eliminated. Britain’s food safety standards remain untouched. Additionally, the U.K. will lower tariffs on 2,500 American products, including olive oil and wine, slightly reducing the average tariff rate.
Prime Minister Starmer affirmed the significance of the U.K.-U.S. relationship during a phone call with Trump, which coincided with commemorations of the Allied victory in Europe during World War II. He hailed the reversed tariffs as “truly historic” amidst this symbolic anniversary. Speaking to workers at a Jaguar Land Rover plant, Starmer praised the agreement as a safeguard for numerous auto jobs and as a precursor to further trade negotiations.
Despite celebrating the anticipated agreement, Trump looked toward the future U.S. economy, even amidst reports suggesting a potential slowdown and inflation, which could threaten employment and financial well-being. He encouraged the public to invest in the stock market, optimistic about an economic resurgence. Reports of reduced shipments to the U.S. from China, which may indicate fewer trade deficits, were dismissed by him as beneficial despite concerns over price increases due to the ongoing tariffs. Trump even mused on potentially imposing steep tariffs on foreign companies like Mattel if they do not relocate production to the U.S., derogating claims of inflation despite evidence of annual rises.
Tensions lingered between Trump and Federal Reserve Chair Jerome Powell, with Trump urging a cut in interest rates to boost the economy, interpreting Powell’s resistance as a lack of personal affection. Powell, meanwhile, has observed the current tariffs’ impacts, advocating for strategic patience.
Following Brexit, the U.S. already enjoys a trade surplus with the U.K., facilitating negotiations with Trump, who prioritizes rectifying trade deficits perceived to be to the U.S.’ detriment. A British official, speaking anonymously on the prenegotiation strategies, mentioned the goal of further trade liberalization potentially reducing effective U.S. tariff rates from the baseline.
Trump himself initiated prospects for this agreement post-Brexit when looking to establish trade deals reflecting more favorable terms for the U.S. These bilateral negotiations formally began in 2020 but stagnated under President Joe Biden. Reinvigorating efforts after Trump’s re-election, these talks have recently gained momentum.
With the U.K. being a crucial trading partner for the U.S., the trade balance showed a $11.9 billion surplus last year, though U.S. goods imports from the U.K. represented a minor portion of total imports. However, with the U.K. seeing the U.S. as its foremost trade ally, the relationship holds substantial economic importance for Britain, emphasizing services rather than goods as the core of its exports across the Atlantic.