President Trump has announced his first trade deal after shocking the world with his April 2 announcement of bigger-than-expected reciprocal tariffs. The S&P 500 is hitting its high for the day, despite the fact that Trump's 10% "reciprocal" tariff will stay in place.
The hope is that the U.S.-UK trade deal could serve as a launchpad for deals with other major trading partners. S&P 500 gains initially moderated after the leaking out of some details, including the 10% tariff, but Trump also spoke positively about weekend trade talks with China. Boeing rose on the announcement amid news of a purchase by a UK airline.
11:58 a.m. ET
Economist: UK Deal Signals Tariffs Will Remain High
Michael Pearce, deputy chief economist at Oxford Economics, wrote that the U.S.-UK trade deal structure — keeping the baseline 10% tariff with limited exemptions — suggests that "the average U.S. tariff is still set to remain in double digits," causing growth to slow sharply in the second half of 2025.
Pearce noted that the UK deal includes quotas for steel and aluminum products, as well as autos. "The deal did not touch more contentious issues," Pearce wrote. He added: "Other countries will be unwilling to offer significant politically difficult concessions in return for minor tariff relief."
11:43 a.m. ET
S&P 500, Boeing, Rolls Royce Gain
The S&P 500 is climbing 1.3%, its high for the day. Boeing stock is up 3.5%, while Rolls Royce is up 4%.
11:38 a.m. ET
Digital Services Tax Relief May Not Be In The Deal
Shares of Amazon, Meta Platforms and Google-parent Alphabet pared gains that were fueled by reports that the UK would roll back its digital services tax. That appears to have been faulty reporting; however, the U.S. and UK will continue to work on a digital trade deal.
11:30 a.m. ET
Trump: 10% Tariff Not A Template For Other Deals
Trump said the UK got a good deal because it has treated the U.S. with respect in trade relations. Tariff levels will be higher, potentially much so, in many other cases.
11:25 a.m. ET
S&P 500 Moves Higher
The S&P 500 extended Thursday's rally to 0.9% as Trump talked optimistically about prospects of a trade deal with China.
The U.S. Dollar Index climbed 0.6% to a hair above 100, approaching a one-month high.
11:22 a.m. ET
China Tariffs Will Be 'Coming Down'
"I think we're going to have a good weekend with China," Trump said.
11:11 a.m. ET
Boeing Is Part Of The Deal
Lutnick said the U.S. will allow in Rolls Royce jet engines with no tariffs. At the same time, he said that an unnamed UK airline will announce a plan to buy $10 billion worth of Boeing commercial planes later today.
Further, Lutnick said the UK is opening up $5 billion in ethanol, beef and machinery trade to U.S. businesses, though details weren't clear.
11:09 a.m. ET
U.S.-UK Deal Terms
Commerce Secretary Howard Lutnick announced details. He said the U.S. would bring in $6 billion a year via a 10% tariff.
In return, the U.S. will allow 100,000 UK autos into the U.S. with a 10% tariff, below the 25% base automotive tariff.
U.S.-UK Trade Deal Details
Here are the other key elements of the deal reported by CNN, before the announcement. The U.S. is set to give some ground on the 25% tariffs imposed on auto and steel imports from the UK
In return, along with accepting the 10% reciprocal tariff rate, the UK will pare back or eliminate its 2% tax on digital services revenue from search engines, social media and online marketplaces. (This turned out to be inaccurate.) The digital services tax raises over $1 billion a year from the likes of Amazon, Facebook and Google. Amazon was up 1.5%, Meta 1.75% and Alphabet 2.5% early Thursday.
Will U.S.-UK Deal Be A Model?
UK imports face only a 10% tax because it's among the trading partners with which the U.S. actually runs a trade surplus. In 2024, the U.S. sent $79.9 billion in goods exports to the UK and imported $68.1 billion, leaving an $11.86 billion surplus, according to Commerce Department data.
On one hand, that means the U.S. didn't have a reason to strike a hard bargain vs. the UK, which might suggest other deals will be harder to reach. However, the UK had even less reason than most other countries to accept a one-sided shift in the terms of trade. In that respect, the UK pact may be a sign that Trump has pretty strong negotiating leverage.
The EU also has a digital services tax that it could swap for tariff relief.
S&P 500
The S&P 500 is up 0.5%, easing off pre-market gains of more than 1%. That could be a reaction to deal terms. Wall Street would like to see reciprocal tariffs lowered, but a lowering of sectoral tariffs is still pretty good news.
The S&P 500 rose 0.4% on Wednesday. That left the S&P 500 just 8.35% below its Feb. 19 all-time closing high and up 13% from the April 8 52-week closing low.
Be sure to read IBD's The Big Picture column after each trading day to get the latest on the prevailing stock market trend and what it means for your trading decisions.
