Trump and Starmer call trade deal 'historic,' but questions remain

Yahoo

08-05-2025

A trade deal with the United Kingdom announced by the White House on Thursday marked the first of its kind since President Trump launched sweeping global tariffs last month, offering a glimpse into the Trump administration's negotiating strategy as it seeks to reset terms with trading partners around the world.
The agreement, hailed by Trump and U.K. Prime Minister Keir Starmer as 'historic,' kept the U.S. baseline tariff rate on U.K. imports at 10%, while eliminating duties on British aluminum and steel and significantly lowering tariffs on a limited number of U.K. car exports.
In exchange, the White House said that London had agreed to lower barriers on U.S. farmers and ranchers seeking access to the U.K. market for exports such as ethanol and beef, and to increase access for U.S. aerospace companies to crucial British-made components.
Although the White House called the agreement a 'milestone' in its trade policy, U.S. officials also described the deal as merely the 'end of the beginning' of talks to come over their trade relationship. And the British media described the agreement as a yearlong, temporary understanding that required further rounds of negotiations if it's going to last.
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Starmer, describing the announcement as the 'basis' of a deal, said he intended to continue negotiating with the administration to bring down its 10% baseline rate. 'We would like to go further,' he said from a manufacturing plant in the West Midlands.
'But please do not underestimate the significance of the tariff reductions today, because these are measured in thousands of good-paying jobs across the country,' Starmer said.
Asked by a reporter whether Britain was better off in its trade relationship with America than it was a year ago, Starmer replied, 'The question you should be asking is, is it better than where we were yesterday?'
The Dow Jones industrial average jumped 500 points on news of the deal, as Wall Street investors look for signs of progress in trade negotiations more than five weeks since Trump announced tariff increases on global trading partners, 'friend and foe alike.'
But economists questioned the value of the announcement.
"This looks like a deal that was largely done for show," said Dean Baker, co-founder of the Center for Economic and Policy Research and one of the first economists to identify the 2008 housing bubble. "There already were very few trade barriers to U.S. exports to the U.K., and this really doesn't change that picture in any meaningful way."
Baker noted that U.K. exports still would face higher taxes than they had before Trump started imposing tariffs. "It will reduce our demand somewhat, but the ultimate impact on volume will depend on what other tariffs remain in place," he said. "In any case, the higher tax on imports from the U.K. amounts to a tax increase of around $6 billion a year on U.S. businesses and consumers."
Of the largest U.S. trading partners, the United Kingdom stands out as having a trade deficit with the United States. The agreement will mean more to the British economy than it will to U.S. households. Although the U.K. accounts for roughly 3% of U.S. trade, the United States is Britain's largest trading partner, followed by the European Union.
"It is good news, but it is not clear how much of a precedent it will be for trade deals," said Kenneth Rogoff, a prominent economist and professor at Harvard. Since the United Kingdom left the European Union in "Brexit," he said, "the U.K. was desperate for a trade deal with the U.S."
And "the deal looks to be the product of years of negotiations that began long before 'Liberation Day,'" he added, referencing Trump's April 2 global tariffs announcement.
Americans buy exponentially more goods from the United States' three biggest trading partners — Canada, Mexico and China — than from Britain, and there are few signs that U.S. talks with those three countries are closing in on trade deals.
And with goods from China still facing tariffs of 145%, U.S. importers and retailers are warning that price increases for American consumers will become visible within a matter of days.
From the White House, where he phoned Starmer to announce the deal to the media, Trump described the U.S.-U.K. agreement as 'a great deal for both parties.'
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'It opens up a tremendous market for us, and it works out very well. Very well,' Trump said. 'The deal includes billions of dollars of increased market access for American exports, especially in agriculture, dramatically increasing access for American beef, ethanol, and virtually all of the products produced by our great farmers.'
'It's very conclusive, and it's a great deal, and it's a very big deal, actually,' he added.
Trump underscored the potential for the export of up to $250 million in U.S. agricultural products to a market that had long been restricted for U.S. goods. But Starmer said that the U.K. government had drawn 'red lines on standards' with regard to agricultural imports, raising questions over what exact products would be eligible.
Starmer said he hoped that the Trump administration would lower barriers on British pharmaceutical products in future talks, and also said the two governments already were discussing Trump's proposed tariffs on foreign film production.
'There aren't any tariffs in place on film at the moment,' Starmer said of the potential film tariffs, 'and of course, we're discussing it with the president's team.'
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This story originally appeared in Los Angeles Times.