US and UK reach first trade deal since Trump's tariff war

US President Trump announced a trade framework agreement with the UK, calling it a "breakthrough" that will reduce trade barriers and expand market access for US goods.

"I am pleased to announce that we have reached a breakthrough trade deal with the UK," Trump said in the Oval Office on Thursday.

Trump said the full details of the agreement will continue to be negotiated in the coming weeks. But under the agreement, the UK will speed up the customs clearance process for US goods and reduce barriers to agricultural, chemical, energy and industrial exports.

"This agreement will provide billions of dollars in additional market access for US exports, especially in the agricultural sector, which will significantly increase market access for American beef, ethanol and almost everything produced by our great farmers," Trump said.

This is the first agreement announced since Trump imposed high tariffs on US trading partners.

"This will promote trade between our countries, will not only protect jobs, but will create jobs and open market access," British Prime Minister Keir Starmer said by telephone.

The deal sparked cautious optimism on Wall Street, with stocks rising and bonds falling on hopes that the deal could serve as a blueprint for future negotiations.

Trump welcomed the market's reaction and predicted that investors would be more encouraged if Congress passed a bill to extend his tax cuts, pushing the S&P 500 index to extend its gains, up about 1.5% to an intraday high.

"If this gets done, plus all the trade deals we're working on, our country will reach a point where people better buy stocks now," he said.

The U.S.-UK trade deal could provide clues to the framework of potential future U.S. deals with other economies. According to U.S. Commerce Secretary Howard Lutnick, the agreement is limited in scope and maintains a 10% base tariff.

Under the deal, British manufacturers will be allowed to export 100,000 vehicles to the United States at a 10% tariff, rather than the 27.5% rate they faced after Trump raised tariffs.

"For the British auto industry, this is tens of thousands of jobs that the president has agreed to protect for them," Lutnick told reporters.

Lutnick said Rolls-Royce-controlled engines and aircraft parts would have tariff-free access to the U.S. market, and a British airline would buy $10 billion worth of Boeing planes, but did not name the specific airline.

In addition, British farmers will receive a zero-tariff quota of 13,000 metric tons of beef. The British government said it would not lower standards for American food imports.

The two sides disagreed on some key details, highlighting the haste with which the deal was reached.

The British government issued a statement saying that U.S. tariffs on British steel and aluminum would be reduced to zero, but the White House described the matter less than an hour later as discussing "alternative arrangements" for metal tariffs and said the agreement established a "new trade alliance" for the relevant metals.

Among the important issues that still need to be resolved: whether and how the UK will adjust its digital services tax, which affects some American technology giants.

According to a list released by the Starmer government, the agreement does not include adjustments to this tax. Instead, the two countries have agreed to "negotiate a digital trade agreement to simplify the paperwork for British companies when exporting to the United States."

The UK said the two sides will also continue negotiations on the pharmaceutical industry and remaining tariffs. But the US government will give Britain "preferential treatment" on any additional industry tariffs that Trump decides to impose, which are expected to include medicines, wood, copper and semiconductors.

British government officials have urged the US for weeks to ease 25% steel, aluminum and auto tariffs.

Britain and the US are also expected to negotiate cooperation on advanced technologies including quantum computing, nuclear fusion and aerospace.

"Today's action also sets the tone for other trading partners to promote reciprocal trade with the United States," the White House said in a statement.

However, Trump said the 10% tariff rate on Britain would not be a template for negotiations with other countries.

"It was a lower number, and they made a good deal. Many, some (countries) will be much higher," Trump told reporters.