The US president called it a "very big deal". The UK prime minister said it was "fantastic, historic" day. For sure, Keir Starmer and his team will have been delighted that the UK was first in line to negotiate adjustments to Donald Trump's sweeping tariffs announced on "liberation day" just a few weeks ago. But what might the trade deal between the UK and US actually mean? We asked four economic experts to respond to the Oval Office announcement.
Authors
- Maha Rafi Atal
Adam Smith Senior Lecturer in Political Economy, School of Social and Political Sciences, University of Glasgow
- Conor O'Kane
Senior Lecturer in Economics, Bournemouth University
- David Collins
Professor of International Economic Law, City St George's, University of London
- Sangeeta Khorana
Professor of International Trade Policy, Aston University
Wins for the UK are real, but limited
Maha Rafi Atal, Adam Smith Senior Lecturer (Associate Professor) in Political Economy, University of Glasgow
The new UK-US trade announcement is less a breakthrough than a careful balancing act - partial, tactical and politically calculated.
Key UK wins are real but limited. Tariffs on British metals and autos are eased, thanks in part to the UK government acquisition of the Chinese-owned Scunthorpe steelmaking facility , removing a longstanding US objection. But even auto tariffs are only scaled back to the general baseline of 10% and not eliminated.
Agriculture and tech remain the real stress points. The UK has granted market access to US agricultural products, including beef, but crucially without changing its food safety standards. This sidesteps a domestic political fight and avoids undermining the UK's Northern Ireland arrangements or its EU alignment . Still, if US beef doesn't meet those standards, the market access may prove meaningless in practice - setting up future pressure points.
Perhaps the most notable UK win: it retains its digital services tax on US tech giants. That tax hits Silicon Valley hard, and the US wanted it gone. Instead, the announcement punts this to future talks - holding the line for now, but not securing it permanently.
This isn't the long-anticipated UK-US free trade agreement. It's not a treaty, not comprehensive, and not ratified. It's a limited, executive-level arrangement with more questions than answers - and more negotiations to come.
Stronger ties and badly needed growth to come
David Collins, Professor of International Economic Law, City St George's, University of London
This deal is an excellent development that should help restore the UK-US trade relationship to what it was before President Trump took office for the second time. At the time of writing, few details about the arrangement are known. But the 25% tariff on UK steel and aluminium has been removed, as has the tariff rate on most car exports - 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. Around 101,000 were exported last year.
More details are promised in the coming days and weeks. Perhaps they will include an agreement which separates the UK from any restrictions that the US intends to impose on the film industry. In return, the UK might eliminate its digital services tax on the US (which I argue it should never have imposed because it will only raise prices for consumers and generate little revenue).
But overall, it seems clear that the Labour government has prioritised the UK's relationship with the EU, evidently seeking as close as possible a connection without formally rejoining. So, while this agreement with Trump is well short of a comprehensive free trade agreement, it is a welcome development that should strengthen Anglo-American ties and bring some badly needed economic growth to both countries.
Political theatre for both sides
Conor O'Kane, Senior Lecturer in Economics, University of Bournemouth
This announcement is a framework for a trade deal rather than an actual formal completed agreement. Trade deals are detailed, complex and take many months to negotiate.
The US and the UK are both countries with massive persistent structural trade deficits. It is very unlikely that what has been announced will significantly shift the dial on either country's structural deficit or growth forecast.
Jerome Powell, chair of the US Federal Reserve, recently warned that Donald Trump's tariff policy risked higher inflation and higher unemployment at the same time, what economists call "stagflation". The president's announcement will prove a welcome distraction from Powell's comments.
The deal should perhaps be viewed as symbolic. Trump's US tariff policy has been chaotic to date and his administration finally has something they can point to as a win in the aftermath of "liberation day".
Of course, a trade deal is also a good news story for the Labour government after disappointing local elections . Prime Minister Keir Starmer can claim economic credibility by being first in line for a trade deal, perhaps cementing the "special relationship".
However, is the US a reliable partner to sign a trade deal with? During his first term, Trump signed a free trade deal with Mexico and Canada (the 2020 United States-Mexico-Canada Agreement , or USMCA - the successor to Nafta). At the time, he said the deal "will be fantastic for all". But he subsequently reneged on it.
There is also a wider strategic element to this. First, the US wanted to get a trade deal in place with the UK ahead of what looks like a comprehensive EU-UK trade deal coming down the line. Second, Trump sees the EU as an economic rival. By signing a deal with the UK, he is signalling to other European countries the possibility of a potentially better trading relationship with the US outside of the EU.
Deal leaves the door open for EU relationship
Sangeeta Khorana, Professor of International Trade Policy, Aston University
The agreement is a tactical win for both countries. It eases trade frictions, supports key industries and sets the framework for a broader UK-US free trade agreement without impacting on the UK's economic reset with the European Union.
The UK-US agreement , which suspends some of Trump's recent tariffs, is sector-specific and far from comprehensive. It preserves UK food safety and animal-welfare standards . And it safeguards post-Brexit EU links while allowing the UK to cement its strategic partnership with Washington. Talks will be launched on aerospace, advanced batteries, data flows and services liberalisation within 12 months.
This is a timely coup, coming so soon after the India deal . The pact represents a strategic diplomatic gain that brings tariff relief (and potentially the associated uncertainty) for key British industries, while also preserving UK's regulatory alignment with the EU.
Maha Rafi Atal is sometimes a volunteer organiser for the US Democratic party/candidates and has no party affiliation or involvement in the UK.
Sangeeta Khorana is Professor and endowed Chair of International Trade Policy at Aston University.
Conor O'Kane and David Collins do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.
