Major markets across the US responded positively as details of the deal emerged, but the UK FTSE 100 was less enthusiastic, closing lower on Thursday evening.
Stocks across the US rose on Thursday after President Donald Trump announced a trade pact with the UK. The deal with Prime Minister Keir Starmer represents the first bilateral agreement the US administration has brokered since launching pre-emptive tariffs on most of the world earlier this year.
Major US indexes closed the day in positive territory on news of the US-UK partnership. The Dow Jones Industrial Average climbed 0.62%, the S&P 500 gained 0.58% and the Nasdaq Composite advanced 1.07%.
Over in the UK, the announcement was greeted with less enthusiasm by market participants. The FTSE 100 closed 0.3% lower, as markets reacted to both the trade pact and the Bank of England’s surprisingly hawkish rate call.
What is in the US-UK trade deal?
Having closely analysed the deal, it is clear that many aspects of Trump’s 10% tariffs on UK goods remain. However, in terms of what has changed, the key highlights of the deal include:
- Car tariffs cut to 10% on up to 100,000 UK vehicles exported to the US
- Tariff on US ethanol imports to the UK removed
- Tariff-free access for Rolls Royce engines and aircraft parts
- UK to buy $10 billion in Boeing aircraft
- 25% US tariffs scrapped on UK steel and aluminium exports
- 20% UK tariff on US beef scrapped; quota raised to 13,000 metric tonnes
Is the deal better for the US or the UK?
The US-UK tariff deal has a number of benefits for both countries. Having said this, it is generally considered to be slightly in favour of the US. While the UK gained partial tariff relief on the exports of cars, steel, and aluminium, the US retained most of its broader 10% import tax on UK goods.
Elsewhere, the US secured a $10 billion aircraft order and expanded beef access to the UK. It also maintained its existing tariff leverage of 10% over its closest ally. With no changes made to the UK’s digital services tax and major sectors like pharmaceuticals still under negotiation, the deal appears to provide more structural and commercial benefit to the US.
What has Trump said about the US-UK deal?
Trump addressed reporters in the White House on Thursday, hailing the agreement as a “great deal for both our countries.” The president then declared that it would open up greater access to US products for the UK.
He said: “Today’s agreement with the UK is the first in a series of agreements on trade that my administration has been negotiating over the past four weeks.
“With this deal, the UK joins the United States in affirming that reciprocity and fairness is an essential and vital principle of international trade… It’s going to be something very special for the UK and special for the United States.”
What has Starmer said about the US-UK deal?
Speaking to factory workers at Jaguar Land Rover, Starmer claimed a political victory, describing the agreement as a “fantastic platform” for his country to build on going forward.
He said: “This historic deal delivers for British business and British workers protecting thousands of British jobs in key sectors including car manufacturing and steel… [and] the UK has no greater ally than the United States.”
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