Trump and Starmer Finalize US-UK Trade Deal Amid Tariff Tensions

On May 8, 2025, President Donald Trump and U.K. Prime Minister Sir Keir Starmer announced a bilateral trade agreement to ease recent trade tensions between the two nations.

After his global tariff blitz, the US President used a press conference in the Oval Office to announce the “first” agreement with the UK.

On a televised live phone call with Sir Keir Starmer, he hailed it as " a great deal for both countries".

The deal includes significant tariff reductions and:

• The U.K. will remove its 19% tariff on U.S. ethanol imports.
• The U.S. will reduce tariffs on British automobile imports from 27.5% to 10%, applying to a quota of 100,000 vehicles, which is nearly the total UK export volume to the U.S. last year.
• U.S. tariffs on British steel imports will fall from 25% to zero, while British tariffs on U.S. ethanol will also be eliminated.
• The UK will lower its average tariffs from 5.1% to 1.8% and provide greater market access to U.S. agricultural and industrial goods, including tariff-free quotas on beef.
• The deal aims to create approximately $5 billion in new annual export opportunities for American producers and generate $6 billion in new U.S. revenue from the tariffs that remain in place.
• The agreement emphasizes reciprocity and fairness in trade, with both sides maintaining some tariffs, including the 10% baseline tariff on many goods.
• The deal also includes provisions to ensure a secure pharmaceutical supply chain and reduce administrative burdens for British firms exporting to the U.S.

A reciprocal agreement allows 13,000 metric tonnes of U.S. beef to enter the U.K. tariff-free, though British food standards remain unchanged.

Despite these concessions, the U.S. will maintain a 10% baseline tariff on most U.K. goods, part of the broader tariff strategy implemented by the Trump administration in April 2025.

This strategy included a 25% tariff on all foreign vehicle imports, affecting U.K. exports.

• The agreement, announced on the 80th anniversary of VE Day, symbolizes the enduring alliance between the U.S. and the U.K. President Trump described it as a "very big and exciting day" for both nations.

Prime Minister Starmer emphasized the deal's benefits for key sectors like automotive and steel, stating it would provide a "trade boost" after weeks of tariff challenges.

While the deal offers relief to industries affected by recent tariffs, some analysts view it as a preliminary step.

The U.K. accounts for a modest share of U.S. trade, and broader trade relationships, particularly with countries like China and the European Union, remain complex.

The agreement also includes provisions to expedite the customs process for American goods entering the U.K., aiming to reduce bureaucratic delays.

As global trade dynamics continue to evolve, this U.S.-U.K. deal represents a strategic move to strengthen economic ties between the two nations.