US President Donald Trump has announced the framework for a trade agreement between the United States and the UK.
“Everyone has spoken and talked about the deal over the years,” Trump said in an exhibition of warmth for his British counterparts. “It’s now done with us,” he added that there are “outside and internal ties” between the two countries. He said it was “honor” to do business with the UK.
Kiel’s Preferred Prime Minister, who called the White House from the UK to join the announcement, welcomed the deal by saying it was a “historic day.”
On Wednesday, Trump said he was preparing to announce “a major trade deal with representatives of a large and respected country.” In a post about the Truth Society, he promised it would be “the first of many.”
Investors have been waiting for Trump to ease his world trade war amid fears that long-term uncertainty about tariffs could seriously damage the world’s biggest economy.
The agreement with the UK marks Trump’s first trade contract since he imposed tariffs on dozens of countries on April 2, the date he called the “liberation date.” Separately, Trump has introduced custom-made tariffs on certain US imports such as cars and steel.
Trump has accused other countries of exploiting the United States through trade and throwing his tariffs to bring his tariffs back to the United States if necessary. He also wants to use tariffs to fund future tax cuts.
What is the US-UK trade agreement?
Until now, most imports from the UK to the US face 10% tariffs. The UK, like other countries, was hit by a 25% tariff on steel and aluminum exports to the US and a 25% tariff on automobiles and auto parts.
Under the new contract, US tariffs on UK goods will be set at 10%, and UK steel and aluminum tariffs will be reduced to zero. The 10% rate is much higher than the 2.5% tariffs on cars under the control of former US President Joe Biden. The deal raises $6 billion in US revenue and generates $5 billion in new export opportunities, the White House said.
The UK has agreed to reduce tariffs on US goods from 5.1% to 1.8%, increasing access to the UK market for US goods. U.S. Secretary of Commerce Howard Lutnick also agreed to buy a $1 billion Boeing BA.n plane at the White House on Thursday during the announcement of the trade deal.
The priority said the deal was made on his promise to protect the British automaker and steel sector. “All of these tariff cuts will be placed as soon as possible,” the star said following a call with Trump.
The deal also created an aluminum and iron trading zone and secured a pharmaceutical supply chain, Trump wrote in a social media post as it was announced at the White House.
The UK has not been forced to remove the 2% digital services tax on US tech companies, as previously expected.
A statement from the UK government said: “The Digital Services Tax remains unchanged as part of today’s transaction. Instead, the two countries have agreed to tackle a digital trade deal that strips back documents for British companies trying to export to the US.
Both governments are likely to present the contract announced today as a significant victory, but essentially returning to the status quo and removing the newly imposed tariff barrier.
It is still unclear how much the agreement will contribute to economic production in both countries.
What does the US and the UK trade?
In 2023, the UK had a comprehensive trade surplus with the US. The UK reported surplus of goods and services of £71.4 billion ($95 billion). But most of that headroom came from service.
On the product side, the UK exported 15.3% of its products to the US in 2023, bringing it to about 60 billion pounds ($800 billion).
Machinery and transport equipment accounted for the largest share of £27 billion ($36 billion) and £14 billion ($19 billion) of chemicals ahead of the market.
Conversely, the US exported £58 billion ($77.2 billion) of goods to the UK in 2023. Ten percent of all British imported goods came from the US that year.
Machinery and transport equipment accounted for the largest share of nearly £20 billion ($27 billion), fuel.
On the services side, the US exported £100 billion ($760 billion) of services (such as advertising and banking) to the UK in 2023, and imported £127 billion through British Services. These are not affected by customs duties.
Could US deals serve as a blueprint for other US negotiations?
Trump warned that contracts maintaining 10% tariffs are not templates from other countries. “That’s a small number,” Trump said.
Trump’s top negotiators have been engaged in a surge in meetings with trade partners since the April 2nd release of the president’s “liberation day.”
Trump delayed the implementation of “mutual” tariffs in most countries by April 9th by the 90th, but he raised them to 145% for China. Beijing slapped 125% tariffs on US goods.
The mutual tariffs, which had varying from 10% to 39%, were designed to clash with countries where Washington has major trade obstacles or impose heavy tariffs on US goods.
On Tuesday, Trump said he will consider potential trade agreements over the next two weeks to decide how much he will accept. Last week he said “we (already) have a potential trade deal” between South Korea and Japan.
After his 90-day refusal, sudden mutual tariffs are expected to be imposed on US trading partners in early July, with representatives of the country set to leave the race to avoid a full-scale trade zone with the world’s number one economy.
What stages of cooperation has the United States reached with other countries?
China
The total commodity trade between the US and China was estimated at $58.24 billion in 2024, according to data from the US Trade Representative.
US goods exports to China totaled $143.5 billion, while US imports from China totaled $438.9 billion. The result is that the US trade deficit with China was $295.4 billion last year, 5.8% ($16.3 billion) than in 2023.
US Treasury Secretary Scott Bescent will meet with China’s deputy prime minister this weekend in Switzerland.
The meeting will take place in Geneva and is expected to address Trump’s decision to end a wide range of tariffs, certain product obligations, export controls and “minimum” exemptions on low-value imports.
China’s Commerce Department said last week it was “evaluating” the offer from Washington. The Geneva Conference will be the first between the two countries since Trump’s trade tariffs were announced in April.
On Tuesday, Bescent told Fox News: “We (US and China) have a common interest that is not sustainable. And 145% and 125% represent an embargo. We don’t want to separate. What we want is fair deals.”
Trump accused China of manipulating currency to make exports cheaper. He also accused Beijing of adopting what he says is a practice of collaborating in the market, including direct government support for Chinese companies, tax credits and priority loans.
european union
In 2023, the European Union exported 520 billion euros ($56.3 billion) worth of goods to the United States, importing 3440 billion euros ($38.6 billion) of goods, equivalent to the EU’s 157 million euros ($177 billion) trade surplus.
After Trump temporarily dropped 20% mutual tariffs in the EU in April, the EU suspended retaliation duties at 21 billion euros ($24 billion) until July 14th.
Since then, Brussels has said it wants to increase US goods imports by 500 billion euros ($57 billion) to address the “problems” of trade relations.
Maros Sefcovic, the EU’s top negotiator, recently told the Financial Times that the bloc has “developed” in attacking deals.
However, Sefcovic suggested that the EU would not accept an indefinite 10% tariff on exports as a fair resolution in trade negotiations. He added that his “ambition” is still to hit a “balanced fair” deal with the White House.
He also said that his US counterparts should consider US services exported to the EU.
The EU experienced a 100 billion euro ($123 billion) trade deficit in the US in 2023 from a service perspective. Brussels exported 319 billion euros ($361 billion) to the United States that year, and imported 427 billion euros ($483 billion).
Taking this into consideration, the US trade deficit will be around EUR 500 billion ($57 billion) with the EU.
The $57 billion US deficit could close quickly, Sefcovic added, along with a deal to buy more US gas and produce. Consultations are currently continuing.
India
In the first three months of 2025, India exported $27.7 billion in goods (mainly pharmaceutical and engineering products) to the US and imported $10.5 billion in goods (mainly aircraft and medical products).
On Tuesday, Trump said India agreed to drop “nothing” all tariffs on US imports. New Delhi has not yet issued an official statement confirming Trump’s remarks.
At a White House event alongside Canadian Prime Minister Mark Kearney, Trump said: “India has the highest tariffs in the world. We’re not going to hold back on that. They agreed to drop it.
India is reportedly proposing to eliminate some US import duties, including steel, auto parts and drugs, as part of an ongoing bilateral trade talk with Washington.
India currently imposes tariffs on US imports ranging from 5% to 30%, depending on product category.
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