President Trump Thursday unveiled a new trade deal with the United Kingdom, raising hopes he will dial back his mushrooming trade war that has rattled global markets and put the U.S. on the brink of a recession according to many economic experts.
The limited agreement with Britain aims to lower the burden of Trump’s sweeping tariffs, delivering a political victory for both U.K. Prime Minister Keir Starmer and Trump, who says it shows his turbulent approach to trade is bearing fruit.
“It is a great honor to have the United Kingdom as our first announcement,” Trump wrote on his social media site. “Many other deals, which are in serious stages of negotiation, to follow.”
Trump vowed the agreement would be “full and comprehensive,” but reports said the 10% U.S. tariff on imported British goods will stay in place.
It’s the first bilateral trade deal since Trump launched his plan to reboot the global economy by dramatically increasing taxes on products imported to the U.S. in an attempt to increase domestic manufacturing.
The signs of progress will likely give markets a boost as traders hope it could lead to a domino effect of other deals.
But the United Kingdom accounts for just 2% of U.S. imports and the U.S. runs a surplus in goods with Britain.
No deals have been reached with America’s largest trading partners, including Canada, Mexico and China, which is the single biggest contributor to the bulging U.S. trade deficit that Trump calls a rip-off for the American people.
Trump imposed a head-spinning 145% tax on products made in China, sparking a confrontation between the world’s two largest economies that shows no sign of ending anytime soon.
Trump last month announced sweeping tariffs on all trading partners, then retreated a week later and announced that his administration would seek individual agreements with individual countries over the next few months.
The U.S. and the U.K. have been aiming to strike a bilateral trade agreement since the British people voted in 2016 to leave the European Union in Brexit, allowing the country to negotiate independently of the rest of the continent.
A major goal of British negotiators has been to reduce or lift the import tax on U.K.-made automobiles and steel, which Trump set at 25%. The U.S. is the largest foreign market for British cars.
Britain has also sought tariff exemptions for pharmaceuticals, while the U.S. wants greater access to the British market for agriculture products.
The British government will see a deal as a vindication of Starmer’s Mr. Nice Guy approach to Trump.
Unlike China and the European Union, Britain did not announce tit-for-tat tariffs on U.S. goods in response to Trump’s import taxes and Starmer flattered Trump at a White House meeting with an invitation from King Charles III for a state visit.
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