- President Trump removes the 25% tariff on UK steel and aluminium.
- The rate on most car exports has been immediately cut from 27.5% to 10%.
- The lower car rate applies to the first 100,000 vehicles exported from the UK to the US each year – almost the total exported last year, according to UK officials.
- The UK government says it’s removing the tariff on ethanol for US goods and agrees “reciprocal market access on beef.”
- Keir Starmer says it’s a “fantastic, historic” day.
Susannah Streeter, head of money and markets, Hargreaves Lansdown:
“News of a UK trade deal hasn’t led to a big Trump bump, instead London’s blue-chip index has struggled to lift out of an afternoon slump. Although Prime Minster Keir Starmer has called it ‘historic’ and President Trump has trumpeted it as ‘a great deal for both countries’, the blanket 10% tariff looks set to be staying in place, which is a disappointment for investors holding out for brighter prospects for the UK economy. The pound has also lost ground against the dollar as markets assess the breadth of the deal. With the blue chip index falling back but stocks on Wall Street rising, it’s an indication it’s being seen as a better deal for the US than the UK.
There will be concessions for UK steel and auto sectors, in return for better deals for US exporters of goods such as chemicals, and machinery, and some agricultural products including beef. The UK will be able to send 100,000 cars to the United States with a reduced tariff rate of 10%, instead of 27.5%. A standout move has come from Rolls Royce. Its shares jumped before losing some ground, after it emerged that engine exports to the US will be exempt from duties in return for a $10 billion Boeing procurement deal agreed by the UK. Shares did rise to almost 4% higher before falling back.
Although US tech has been mentioned as a Trump beneficiary, there’s a distinct lack of detail in the plans so far unveiled. Rumours are still swirling that about possible changes to thedigital services tax given that Starmer has flagged fresh talks about a separate digital trade deal that would reduce paperwork for British firms exporting to the US. Tweaking this tax will be controversial as although ministers may think it’s worth reducing the £800,000 million for the Exchequer as part of its bargaining tool kit, it will be highly controversial given the might of American technological firms.
Doing a deal with Trump will be a double-edged sword for Keir Starmer. He has certainly notched up more scores on the doors for the UKs trade prospects, coming hot on the heels of the India deal, and it’s likely to help the economy keep grinding forward in terms of growth rather than risking going into reverse.
But it’s still a hard message to pull off politically as Trump’s demands appear to be appeased, while companies have had to cope with payroll cost increases and people have had to endure benefit cuts to help the government balance the books.
The UK has jumped the queue with the US, ahead of the EU, in sealing this deal. It comes at a delicate time given that Keir Starmer is also hoping to broker a better trading environment with European allies in a post-Brexit world. Although it’s unlikely to blow the negotiations off course, it could make talks that little bit more challenging, so Keir Starmer will be performing a high wire balancing act.”
