US-UK trade deal: How are Trump’s global tariff talks shaping up?

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United States President Donald Trump announced the framework of a trade deal between the US and the United Kingdom, which re-sets US tariffs on most UK goods at 10 percent, on Thursday.

“For so many years, everybody talked and talked about a deal,” Trump said in a display of warmth towards his British counterpart. “It’s now been done with us.” He added that there was an “external and internal bond” between the two countries. It had been “an honour” doing business with the UK, he said.

Prime Minister Keir Starmer, who called in to the White House from the UK to join the announcement, welcomed the deal, saying it was a “historic day”.

On Wednesday, Trump had said he was preparing to announce “a major trade deal with representatives of a big and highly respected country”. In a post on Truth Social, he promised it would be the “first of many”.

Investors have been waiting for Trump to ease his global trade war amid fears that prolonged uncertainty over tariffs could inflict serious damage to the world’s biggest economies.

The agreement with the UK marks Trump’s first trade deal since he imposed tariffs on dozens of countries on April 2, a date he called “Liberation Day”. Separately, Trump has introduced bespoke tariffs on certain US imports, including cars and steel.

Trump has long accused other countries of exploiting the US on trade, casting his tariffs as necessary to bring jobs back to the US. He also wants to use tariffs to finance future tax cuts.

What is in the US-UK trade agreement?

Until now, most imports from the UK to the US have faced a blanket 10 percent tariff. The UK, like other countries, was also hit with 25 percent tariffs on steel and aluminium exports to the US, as well as a 25 percent tariff on cars and car parts.

Under the new agreement, US tariffs on UK goods will be set at 10 percent while tariffs on UK steel and aluminium will be reduced to zero. The 10 percent rate is still much higher than the 2.5 percent tariffs on cars under the administration of former US President Joe Biden. The deal will raise $6bn in revenues for the US and create $5bn in new export opportunities, the White House said.

The UK has agreed to lower tariffs on US goods to 1.8 percent from 5.1 percent and to provide greater access in UK markets for US goods. It has also agreed to purchase $10bn of Boeing BA.N planes, US Commerce Secretary Howard Lutnick said at the White House on Thursday during the trade deal announcement.

Starmer said the deal delivered on his promise to protect British carmakers and the steel sector. “All of these tariff cuts will come into place as soon as possible,” Starmer said following his phone call with Trump.

The deal will also create an aluminium and steel-trading zone and secure the pharmaceutical supply chain, Trump wrote in a social media post as the deal was announced at the White House.

The UK has not been forced to drop its 2 percent digital services tax on US tech firms, as was previously expected.

A UK government statement said: “The Digital Services Tax remains unchanged as part of today’s deal. Instead, the two nations have agreed to work on a digital trade deal that will strip back paperwork for British firms trying to export to the US – opening the UK up to a huge market that will put rocket boosters on the UK economy.”

While both governments will likely present the agreement announced today as a significant win, it is essentially about returning to the status quo – removing the newly imposed tariff barriers.

It remains to be seen how much any agreement will contribute to both countries’ economic output.

What and how much do the US and UK trade?

In 2023, the UK had an overall trade surplus with the US. The UK reported a surplus of 71.4 billion pounds ($95bn) in goods and services. Most of that headroom came from services, however.

On the goods side, the UK exported 15.3 percent of its goods to the US in 2023 – amounting to roughly 60 billion pounds ($80bn).

Machinery and transport equipment accounted for the largest share, at 27 billion pounds ($36bn), ahead of chemicals at 14 billion pounds ($19bn).

On the flipside, the US exported 58 billion pounds ($77.2bn) of goods to the UK in 2023. Ten percent of all goods imported by the UK came from the US in that year, second only to Germany.

Machinery and transport equipment accounted for the largest share, worth nearly 20 billion pounds ($27bn), followed by fuel – amounting to 18.7 billion pounds ($25bn).

On the services side, the US exported 102 billion pounds ($76bn) in services – things like advertising and banking – to the UK in 2023, and imported 127 billion pounds $170bn in British services. These are unaffected by tariffs.

Could the US deal serve as a blueprint for other US negotiations?

Trump cautioned that the agreement, with its preservation of a 10 percent tariff, was not a template for other countries. “That’s a low number,” Trump said.

Trump’s top negotiating officials have engaged in a flurry of meetings with trade partners since the president’s “Liberation Day” tariff announcement on April 2.

Although Trump delayed implementing “reciprocal” tariffs for most countries by 90 days on April 9, he did raise them for China to 145 percent. Beijing, in turn, slapped a 125 percent tariff on US goods.

The reciprocal tariffs, which varied from 10 percent to 39 percent, were designed to hit countries with which Washington has large trade deficits, or that impose heavy tariffs on US goods.

On Tuesday, Trump said he would review potential trade agreements over the next two weeks to decide which ones to accept. Last week, he said that “we [already] have potential trade deals” with South Korea and Japan.

Following his 90-day reprieve, steep reciprocal tariffs are due to be imposed on US trade partners in early July, leaving country representatives racing to avoid a full-blown trade spat with the world’s number-one economy.

What stage of talks has the US reached with other countries?

China

According to data from the Office of the United States Trade Representative, the total goods trade between the US and China stood at an estimated $582.4bn in 2024.

US exports of goods to China totalled $143.5bn while US imports from China totalled $438.9bn. The upshot is that the US trade deficit with China was $295.4bn last year, 5.8 percent higher ($16.3bn) than in 2023.

US Treasury Secretary Scott Bessent will meet with China’s Vice Premier He Lifeng in Switzerland this weekend for talks, which may be the first step in resolving a trade war between the world’s two largest economies.

Meetings will take place in Geneva, and are expected to address reductions on broad tariffs, duties on specific products, export controls and Trump’s decision to end “de minimis” exemptions on low-value imports.

China’s Commerce Ministry said last week that it was “evaluating” an offer from Washington. The Geneva meeting will be the first between the two countries since the announcement of Trump’s trade tariffs in April.

On Tuesday, Bessent told Fox News, “We [the US and China] have a shared interest that isn’t sustainable. And 145 percent and 125 percent is the equivalent of an embargo. We don’t want to decouple. What we want is fair trade.”

Trump has accused China of manipulating its currency to make its exports cheaper. He has also slammed Beijing for adopting what he says are market-interfering practices, such as direct government support for Chinese companies, as well as tax breaks and preferential financing.

European Union

In 2023, the European Union exported 502 billion euros ($563bn) worth of goods to the US and in turn imported 344 billion euros ($386bn) of goods, amounting to a goods trade surplus in the EU’s favour of 157 billion euros ($177bn).

After Trump temporarily dropped his 20 percent reciprocal tariffs on the EU in April, the EU paused retaliatory duties on 21 billion euros ($24bn) of US goods until July 14, including on Harley-Davidson motorcycles, chicken and clothing.

Since then, Brussels has said it wants to increase US goods imports by 50 billion euros ($57bn) to address the “problem” in their trade relationship.

Maros Sefcovic, the EU’s top negotiator, recently told The Financial Times that the bloc is making “progress” towards striking a deal.

But Sefcovic suggested that the EU would not accept an indefinite 10 percent tariff on its exports as a fair resolution to trade talks. He added that his “ambition” was still to strike a “balanced and fair” deal with the White House.

He also said he wants his US counterparts to take into account US services that are exported to the EU.

The EU experienced a services trade deficit of 109 billion euros ($123bn) with the US in 2023 in terms of services. Brussels exported 319 billion euros ($361bn) in services to the US that year, while importing 427 billion euros ($483bn).

Taking this into account would bring the US overall trade deficit with the EU to about 50 billion euros ($57bn), he said.

The new $57bn US deficit could be closed quickly, Sefcovic added, with deals to purchase more US gas and agricultural products. Talks are currently continuing.

India

In the first three months of 2025, India exported $27.7bn of goods (mainly pharmaceutical and engineering products) to the US, while importing $10.5bn of goods (mainly aircraft and medical goods), meaning a US trade deficit of $17.2bn.

On Tuesday, Trump revealed that India had agreed to drop all tariffs on US imports “to nothing”. New Delhi has not yet issued an official statement confirming Trump’s remarks.

At a White House event alongside Canadian Prime Minister Mark Carney, Trump said, “India has one of the highest tariffs in the world. We are not going to put up with that. They have agreed to drop it to … nothing. They wouldn’t have done that for anybody else but me.”

According to Bloomberg, India has reportedly proposed eliminating tariffs on select US imports – including steel, car parts and pharmaceuticals – as part of ongoing bilateral trade talks with Washington.

India currently imposes tariffs on US imports ranging from 5 percent to 30 percent, depending on the product category.

A zero-tariff offer would apply on a reciprocal basis and would be limited to a specific volume of goods.

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