US, UK reach limited trade deal

WASHINGTON/LONDON — US President Donald Trump and British Prime Minister Keir Starmer on Thursday announced a limited bilateral trade agreement that leaves in place Trump's 10 percent tariffs on British exports, modestly expands agricultural access for both countries and lowers prohibitive US duties on British car exports.

The "general terms" agreement is the first of dozens of tariff-lowering deals that Trump expects to land in coming weeks after upending the global trading system with steep new import taxes aimed at shrinking a $1.2 trillion US goods trade deficit.

Trump unveiled the deal in the Oval Office with Starmer patched in on a speaker phone. The two leaders heralded the plan as a "breakthrough deal" that lowers average British tariffs on US goods to 1.8 percent from 5.1 percent but keeps in place a 10 percent tariff on British goods.

However, details of the agreement still need to be finalized.

Trump pushed back against seeing the UK deal as a template for other negotiations, saying that Britain "made a good deal" and that many other trading partners may end up with much higher final tariffs because of their large US trade surpluses.

Washington will roll out dozens of trade deals over the next month, but a 10 percent tariff imposed on most countries will likely stay, US Commerce Secretary Howard Lutnick told CNBC on Thursday.

In April, Trump imposed "reciprocal duties" of up to 50 percent on goods from 57 trading partners including the European Union, according to Reuters. He paused them days later to allow time for negotiations until July 9. The president has also heaped new 25 percent tariffs on auto imports, ended all exemptions on steel and aluminum duties, and announced new tariff probes on pharmaceuticals, copper, lumber and semiconductors. This week he added movies to the list.

Under the new deal, the first 100,000 vehicles imported into the US from the UK each year are subject to the "reciprocal rate" of 10 percent and any additional vehicles each year are subject to a 25 percent rate, according to a White House fact sheet.

Lutnick said at the White House event that 100,000 vehicles only accounted for 0.6 percent of the US auto market. But according to a statement from the British government, a quota of 100,000 cars is "almost the total" the UK exported last year.

According to the agreement, Britain will reduce or eliminate nontariff barriers and expand market access for US products such as beef, ethanol and some industrial goods, the White House fact sheet showed.

The White House also announced that the deal creates "a new trading union" for steel and aluminum. The statement from the British government said tariffs on British steel exports to the US will be removed.

The tariff cuts will come into place "as soon as possible", Starmer said on Thursday.

A UK official told reporters that the US and the UK have more serious work to do, and noted the deal did not include Washington's demand for restructuring Britain's digital services tax, levied at 2 percent of UK revenue for online marketplaces. Washington could revisit the issue, but there was no agreed process for doing so, the official said.

"This is not a finished, classic 'bells and whistles' free trade agreement," the official said.

Kemi Badenoch, leader of the UK's Conservative Party, slammed the deal on social media: "We cut our tariffs — America tripled theirs. Keir Starmer called this 'historic'. It's not historic, we've just been shafted!"

Liberal Democrat leader Ed Davey echoed concerns, warning that the agreement fails to protect British industries. "Even after today's deal, Trump's terrible tariffs will still be hitting British jobs and businesses hard," he said on social media X.

In another development, the European Commission has launched a public consultation targeting US imports worth 95 billion euros ($107.2 billion), warning that retaliatory measures could take effect if ongoing negotiations with the US fail to yield an agreement, according to a statement released on Thursday.

Agencies - Xinhua