The UK and the US have reached a trade deal, with the American president and British prime minister formally signing an agreement to lower tariffs on some UK imports.
The deal, hashed out on the sidelines of this week’s busy G7 summit, means that the UK aerospace and automotive industries will dodge some of the import taxes that Trump is implementing as part of his global trade war.
Speaking about the landmark agreement, Trump said that the UK is protected from future tariffs “because I like them.”
He then appeared to mistake the UK for the European Union, saying: “I just signed it, and it’s done. And so we have our trade agreement with the European Union, and it’s a fair deal for both, and it produces a lot of jobs, a lot of income.”
He added: “And we have many, many other ones coming. But you see, the level of enthusiasm is very good, but the relationship that we have is fantastic.”
The deal appears to offer the UK relief from tariffs on cars, in exchange for giving America’s agricultural industry greater access to British markets. However agreements about what this means for the UK’s steel industry are yet to be revealed.
It’s understood that the deal will come into effect seven days after it has been officially published.
The agreement came shortly before Trump ended his G7 visit prematurely to head back to the United States, amid escalating concerns about the Middle East.
Here are some of the key points of the deal:
Car tariffs
American tariffs on British cars fall to 10% for the first 100,000 vehicles exported to the US. The parts needed for those cars will also receive special trade treatment.
Trump had set the tariff rate on car exports to the US at 27.5%.
British car makers were also understood to have been intensely worried about the impact tariffs on their industry would have had if left unchecked.
Steel and aluminium tariffs
Although the US has promised to remove the 25% tariff rate on UK steel and aluminium exports, reducing the trade barrier for these goods to zero, that wasn’t announced in the recent trade deal.
"We're gonna let you have that information in a little while," Trump told reporters when quizzed about steel and aluminium.
As it stands, the UK steel industry still faces a 25% tariff but the two countries are expected to “promptly” work toward a reprieve to Britain’s steel industry, which only weeks ago was on the verge of collapse.
Other tariffs
The UK’s aerospace market will pay no tariffs as part of the deal, which the UK government claims will “save hundreds of millions annually for plane and car makers.”
A 10% baseline tariff on most goods, described by Trump as a “reciprocal” tariff, remains in place.
Talks over lowering the reciprocal tariffs are understood to be ongoing, but there is no deadline on how long they may continue.
The UK will also get preferential treatment in any further tariffs on national security grounds, Trump announced as part of his drive to protect US business.
Pharmaceuticals
Although British pharmaceuticals are not subject to tariffs from the US, Trump has mulled over the idea of imposing trade levies on global imports from the industry.
Pending the results of compliance investigations, the countries pledged to “negotiate significantly preferential treatment outcomes on pharmaceuticals and pharmaceutical ingredients”.
The UK also promised it would endeavour to “improve the overall environment” for pharmaceutical companies based there.
However, no mention of pharmaceuticals was made in the latest trade deal.
Agriculture
Both the US and UK’s agriculture sectors will gain new access to one another’s markets under the deal.
UK beef farmers will be allowed access to the US market for the first time, joining a group of select countries such as Australia which have a similar arrangement.
British farmers have been given a tariff-free quota for 13,000 metric tonnes.
US farmers will, in turn, be granted new access to the UK: British tariffs on beef will fall from as much as 125%, in some cases, also to zero, for a 13,000-tonne quota.
However Sir Keir insisted the Government had stuck to its “red lines” on farming standards including restrictions on beef injected with horomones. Some experts have raised concerns about whether enforcing restrictions will be effective.
Additionally, the UK will remove tariffs on 1.4 billion litres of ethanol, used to produce beer, which comes from the US.
What non-tariff measures are in the deal?
Under the plan, the US and UK committed to working toward economic security by coordinating to “address non-market policies of third countries”.
They also pledged closer cooperation on keeping investments, exports and tech vendors secure by building on already closely aligned trade and investment security measures.
The US and UK have agreed to negotiate “ambitious” provisions for digital trades, a move which could impact services like online banking, financial tech, insurance or other industries that rely heavily on digital infrastructure.
Additionally, both sides agreed to better cooperate in tackling duty tax evasions on imports and exports.
What is not in the deal?
There is nothing in the deal on US access to the NHS. Nor is there anything on concessions on a 2% tax on US big tech companies.
Business Secretary Jonathan Reynolds told reporters: “Just to be absolutely clear about what is not in this agreement. There is nothing in this agreement in relation to online harms or the Online Safety Act. There’s nothing in this agreement in relation to digital services tax. Nothing in the agreement in relation to the NHS.”
The politics
The Prime Minister appears to have defied his political opponents who called for him to take a harder stance with the president.
“I know people along the way were urging me to walk away, to descend in a different kind of relationship. We didn’t. We did the hard yards. We stayed in the room. I’m really pleased to say to the workforce here and through them to the country, how important I think this deal is,” Sir Keir said following the deal.
Lib Dem leader Sir Ed Davey was among those who called for a more muscular approach with Trump.
Some politicians have also criticised the outcome of the UK-US trade deal, with Kemi Badenoch calling it a “tiny tariff deal," while previously suggesting the UK had been “shafted.”
Lib Dem spokesperson Daisy Cooper called on the government to share the details of the deal, "including publishing impact assessments on how it will affect British farmers, food standards and steel industry".
Terms of the deal
Either side may cancel the deal by giving written notice to the other nation, according to the terms of the agreement.
Further details about how the deal could be reviewed, changed or terminated will be discussed during negotiations.
