Washington: In a major shift in transatlantic trade relations, President Donald Trump and UK Prime Minister Sir Keir Starmer have announced a sweeping new trade agreement, hailed as “historic,” that significantly reduces tariffs on British exports to the United States. The announcement came on the symbolic 80th anniversary of VE Day, reinforcing the enduring ties between the two allies.
The deal marks the first major breakthrough in trade diplomacy since President Trump reignited a global tariff war earlier this year, imposing broad levies on international trade partners. Under the new pact, tariffs on British steel and aluminium exports to the US—previously set at 25%—will be eliminated entirely. Meanwhile, a quota of 100,000 British-made vehicles exported annually to the US will see tariffs reduced from 27.5% to 10%.
In exchange, the UK has agreed to lower its own tariffs on US goods from 5.1% to 1.8% and offer expanded market access for American products. However, Britain has held firm on food safety standards aligned with EU regulations, though limited concessions will allow access for US agricultural producers who meet specific requirements.
“This opens up enormous opportunities for American businesses and workers,” Trump declared during a joint teleconference. Starmer called it “a fantastic, historic day” for British industry, which has faced mounting economic challenges under the weight of US-imposed tariffs.
The agreement also includes a range of sector-specific provisions. British plane parts will now be exported to the US tariff-free, with a reciprocal commitment involving a major UK airline purchasing $15.5 billion worth of Boeing aircraft. Additionally, a 13,000-tonne quota for tariff-free British beef will be introduced, and UK tariffs on US ethanol—used in brewing—will be dropped.
The accord stops short of fully dismantling Trump’s broader trade agenda. A baseline 10% tariff on most US trading partners, enacted last month on “liberation day,” remains in force. High tariffs on countries like China (145%) and Canada and Mexico (25%) are also still in place, though some have been suspended for ongoing negotiations.
Britain, meanwhile, has been seeking to strike a delicate balance in its post-Brexit trade strategy, pursuing deals with the US, EU, and China without becoming overly reliant on any single bloc.
Domestically, Starmer’s government faces political risks. While the trade pact offers economic relief, the ruling party remains unpopular in polls, limiting its ability to make controversial policy moves—such as cutting taxes on large tech firms. The UK’s digital services tax, aimed at major US tech companies, will remain intact.
With fresh talks on pharmaceuticals set to follow, the agreement is being viewed as a stabilizing step in a volatile global trade environment—one that could help avert recessionary pressures while preserving strategic alliances.
