US, UK strike partial trade deal

May 09, 2025 (MLN): In a strategic move toward reshaping global trade, U.S. President Donald Trump and UK Prime Minister Keir Starmer announced a partial trade agreement, aimed at easing select trade barriers between the two allies.

The deal retains a 10% U.S. tariff on British exports but provides modest gains in agricultural access for both nations and reduces high duties on British cars entering the U.S. market.

Billed as a foundational agreement, the deal is the first in a series of targeted tariff reductions expected to follow.

Trump, speaking from the Oval Office with Starmer joining by speakerphone, underscored that while Britain struck a “good deal,” other countries with larger trade surpluses could face much tougher terms.

U.S. officials, including Treasury Secretary Scott Bessent and chief trade negotiator Jamieson Greer, are now heading to Switzerland to launch trade talks with Chinese representatives.

Trump emphasized that these discussions would be substantive, marking a step beyond initial diplomacy, as AP news reported.

The agreement, reached amidst a backdrop of aggressive tariff policies, stems from Trump’s April decision to impose reciprocal duties of up to 50% on imports from 57 economies, including the European Union.

Though those duties were paused to allow room for talks through July 9, further tariffs on automobiles, steel, aluminum, and new sectors like pharmaceuticals, copper, semiconductors and recently, movies are still on the table.

Starmer welcomed the development, calling it a “historic day” and pointing to the alignment with the 80th anniversary of World War II’s end in Europe.

He highlighted the agreement's potential to protect and create jobs by expanding market access and boosting cross-border trade.

The new trade terms bring down the average British tariff on U.S. goods to 1.8% from 5.1%, while the 10% U.S. tariff on UK goods remains unchanged.

A UK official clarified that although the deal isn’t a full-scale free trade agreement, it has grown beyond its original scope and lays the groundwork for future engagement.

The digital services tax issue Washington’s key demand remains unresolved, and no negotiation mechanism has been set up yet.

The deal prompted a strong reaction on Wall Street, with major indexes posting gains.

The S&P 500’s airline index jumped 5.4%, fueled by a 7.2% surge in Delta Air Lines after it was confirmed that Rolls-Royce engines made in Britain would now enter the U.S. without tariffs.

Commerce Secretary Howard Lutnick noted that dozens of similar trade deals will be unveiled over the coming month as the administration looks to calm investor concerns and reduce economic friction.

Still, Trump’s most complex challenge remains ahead navigating a trade impasse with China, where tit-for-tat tariffs as high as 145% have locked both economies in a standoff. High-level negotiations are scheduled for the weekend.

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