U.S. President Donald Trump and British Prime Minister Keir Starmer on Thursday announced a limited bilateral trade agreement that leaves in place Trump's 10% tariffs on British exports, modestly expands agricultural access for both countries and lowers prohibitive U.S. duties on British car exports.

The preliminary deal is the first of dozens of tariff-lowering deals that Trump expects to land in coming weeks after upending the global trading system with steep new import taxes aimed at shrinking a $1.2 trillion U.S. goods trade deficit.

Trump hailed the deal in the Oval Office with Starmer patched in on a speaker phone, as U.S. Treasury Secretary Scott Bessent and top trade negotiator Jamieson Greer head to Switzerland to launch negotiations with Chinese negotiators.

He pushed back against seeing the UK deal as a template for other negotiations, saying that Britain "made a good deal" and that many other trading partners may end up with much higher final tariffs because of their large U.S. trade surpluses.

In April, Trump imposed reciprocal duties of up to 50% on goods from 57 trading partners including the European Union, pausing them days later to allow time for negotiations until July 9. He has also heaped new 25% tariffs on auto imports, ended all exemptions on steel and aluminum duties, and announced new tariff probes on pharmaceuticals, copper, lumber and semiconductors. This week he added movies to the list.

"It opens up a tremendous market for us," Trump told reporters, noting that he had not fully understood the restrictions facing American firms doing business in Britain.

"This is a really fantastic, historic day," Starmer said, noting that the announcement came nearly at the same hour 80 years ago when World War Two ended in Europe. "This is going to boost trade between and across our countries, it's going to not only protect jobs, but create jobs, opening market access."

The two leaders heralded the plan as a "breakthrough deal" that lowers average British tariffs on U.S. goods to 1.8% from 5.1% but keeps in place a 10% tariff on British goods.

A UK official told reporters that the United States and the United Kingdom have more serious work to do, and noted the deal did not include Washington's demand for restructuring of Britain's digital services tax, levied at 2% of UK revenue for online marketplaces. Washington could revisit the issue, but there was no agreed process for doing so, the official said.

"This is not a finished, classic 'bells and whistles' free trade agreement. It started off as a tactical response to President Trump's tariffs, but actually morphed into a more substantive trade deal," the official said. "And it will be built on. ... We've done the Oval Office, now we've got more serious work to do."

Trump's first trade deal fueled a rally on Wall Street, sending major U.S. indexes briefly up over 1%. The S&P 500 passenger airlines index closed up 5.4%, led by a 7.2% surge in Delta Air Lines (NYSE:DAL.N) as U.S. Commerce Secretary Howard Lutnick said British-made Rolls-Royce (OTC:RYCEY) engines would enter the U.S. duty-free.
Trump's administration has been under pressure from investors to strike deals and de-escalate its tariff war after the U.S. president's often chaotic policymaking upended global trade with friends and foe alike, threatening to stoke inflation and tip the global and U.S. economies into recession.

Lutnick told CNBC on Thursday that Washington will roll out dozens of trade deals over the next month.

Trump's biggest challenge, however, is resolving a virtual trade embargo between the U.S. and China, with tariffs of 145% and 125%, respectively on each side. Greer and Bessent will lead talks with Chinese officials in Switzerland, on Saturday and Sunday. Trump said the talks would be substantive -- more than an ice-breaker -- and predicted the tariffs would come down.

Source: Investing.com