The United States and the United Kingdom have agreed in principle to a bilateral trade deal that reduces key tariffs and expands market access, marking the first such agreement since President Donald Trump reintroduced widespread import duties in early April.

Under the proposed deal, US tariffs on UK steel and aluminium would drop from 25% to zero, while duties on British autos would be cut from 27.5% to 10%, capped at 100,000 vehicles annually. In return, the UK will lower non-tariff barriers for US exports, including beef, ethanol, machinery, and chemicals. British officials have also agreed to fast-track US goods through customs.

The final text of the agreement is still in development. However, both governments have been quick to highlight its significance, politically, economically, and symbolically.

Speaking to reporters, President Trump said, “The final details are being written up. In the coming weeks, we’ll have it all very conclusive.”

Commerce Secretary Howard Lutnick confirmed that the 10% baseline tariff introduced as part of Trump’s new trade regime will remain in place for most countries, including the UK, but described the auto tariff reduction as a strategic adjustment within that framework.

Strategic repositioning

For Trump, the agreement is intended as proof-of-concept for his tariff-first approach. For Prime Minister Keir Starmer, it delivers a visible win at home, particularly for the UK automotive sector. Speaking from a Jaguar Land Rover facility in the West Midlands, Starmer framed the deal as a job protection measure and positioned it as a first step toward a broader global trade agenda.

Coming on the 80th anniversary of Victory in Europe Day, when allied forces defeated Nazi Germany during the second world, the timing of the agreement is a subtle nod to the enduring nature of UK-US relations.

The US already runs a trade surplus in goods with the UK ($11.9 billion in 2024) which made the negotiation comparatively straightforward. The UK, meanwhile, counts the US as its largest trading partner by total value, with the bulk of exports concentrated in services.

Agriculture and food standards remain a red line for Britain. While the US has long sought greater access for American poultry and hormone-treated beef, British officials have reaffirmed that food safety standards will not be relaxed.

Implications and next steps

Trump has made clear that his administration will pursue one-on-one deals rather than re-entering multilateral trade frameworks. Whether this bilateral model can be scaled remains an open question.

No formal agreements have been reached with larger trading partners, including China, Canada, or Mexico. Tariffs on Chinese goods remain as high as 145%, though initial talks are set to begin this weekend in Switzerland.

For Starmer, the deal offers validation for a measured approach to Washington. Unlike the EU, which imposed retaliatory tariffs, the UK opted for dialogue, a move that appears to have paid off.

The UK government also recently finalised a trade deal with India and is pursuing further adjustments to ease frictions with the European Union.

The finalisation of the US-UK agreement is expected in the coming weeks. 

Implications for trade and treasury


While the UK–US trade deal focuses on industrial resilience, it has clear implications for trade finance, treasury, and liquidity professionals.

Tariff cuts on cars, steel, and ethanol are expected to lift cross-border volumes, driving demand for instruments such as letters of credit, trade credit, and working capital solutions.

The agreement restores pricing certainty for lenders underwriting UK–US flows, particularly in capital-heavy sectors.

A proposed digital trade agreement could streamline documentation and enable faster settlement, offering efficiency gains for corporate treasury and payments teams.

Though a 10% tariff remains on many UK goods, the deal signals a shift toward bilateral, sector-specific diplomacy — giving trade finance players renewed access to the US market under more stable conditions.