UPDATED: Trump, Starmer Unveil Trade Deal, Keep Key U.S. Tariffs in Place

President Donald Trump and British Prime Minister Keir Starmer on Thursday announced a new U.S.-U.K. trade agreement described as a “breakthrough,” though it maintains a 10% tariff on British goods entering the United States.

The pact, unveiled by Trump from the Oval Office and hailed by Starmer via teleconference as a “historic day,” lowers British tariffs on American products from 5.1% to 1.8% and opens greater access to U.S. exporters in several key sectors. It marks the first bilateral agreement since Trump’s return to the White House in January, after he re-ignited trade tensions with a series of broad tariffs that disrupted global commerce.

“It opens up a tremendous market for us,” Trump said. “Other countries should take note—we’re open to deals, but we won’t hesitate to protect American interests.”

The U.S. has faced growing pressure from financial markets to calm tariff-related uncertainty, which analysts warn could stoke inflation and hamper economic growth. Since imposing a sweeping 10% tariff on most imports April 2—along with steeper duties on autos, metals, and Chinese goods—the administration has embarked on a rapid series of trade negotiations.

The deal with London reduces U.S. tariffs on British auto exports to 10% from the current 27.5%, applying to an annual quota of 100,000 vehicles—nearly the entirety of last year’s shipments. Tariffs on UK steel fall to zero, while British tariffs on U.S. ethanol and beef imports will also be lifted, within strict volume limits and without changes to food safety standards.

Commerce Secretary Howard Lutnick said Britain is expected to announce a $10 billion purchase of U.S.-assembled Boeing aircraft, though a White House release referred more generally to “aircraft parts.” In exchange, Rolls-Royce jet engines will receive duty-free access to the U.S. market.

The agreement is projected to create $5 billion in new annual export opportunities for U.S. producers and $6 billion in additional tariff revenue, according to Lutnick.

While London held firm on maintaining EU-aligned food standards, U.S. producers that meet stricter criteria—avoiding growth hormones and certain washes—will gain market entry. No details were provided regarding pharmaceutical tariffs, a potential concern for major UK firms AstraZeneca and GSK.

The announcement gave an immediate boost to British companies with U.S. exposure. Shares in Aston Martin surged 10%, while retailers such as JD Sports and AB Foods, the owner of Primark, also posted gains.

The deal comes as Starmer’s government, under pressure from stagnant economic growth and mounting political challenges at home, seeks to balance post-Brexit relations with the U.S., EU, and China.

“The American, Indian and other deals we can do will be really important to the long-term economic health of the UK,” a FTSE 100 CEO said, speaking anonymously. “But don’t expect them to result in overnight euphoria.”

Britain this week also signed a separate free trade deal with India. Despite the transatlantic breakthrough, the UK’s 2% digital services tax—opposed by Washington—will remain in place, with U.S. tech giants such as Google and Amazon continuing to pass the costs on to customers.

U.S. and Chinese officials are scheduled to meet in Switzerland on Saturday to discuss trade tensions, with tariffs on Chinese imports still set at 145%.