United States President Donald Trump is expected to announce the framework of a trade deal between the US and the United Kingdom on Thursday, according to people familiar with the plan.
On Wednesday, Trump said he was preparing to announce “a major trade deal with representatives of a big and highly respected country”. In a post on Truth Social, he promised it would be the “first of many”.
Investors have been waiting for Trump to ease his global trade war amid fears that prolonged uncertainty over tariffs could inflict serious damage to the world’s biggest economies.
An agreement with the UK would mark Trump’s first trade deal since he imposed tariffs on dozens of countries on April 2, a move he called “liberation day”. Separately, Trump has introduced bespoke tariffs on certain US imports, including cars and steel.
Trump has long accused other countries of exploiting the US on trade, casting his tariffs as necessary to bring jobs back to the US. He also wants to use tariffs to finance future tax cuts.
What could be in a US-UK trade agreement?
At the moment, most imports from the UK to the US face a blanket 10 percent tariff. The UK, like other countries, has also been hit with 25 percent tariffs on steel and aluminium exports to the US, as well as a 25 percent tariff on cars and car parts.
The broad outline of a proposed deal has been clear for some time – significant reductions in US tariffs on steel and cars, with an expectation that Trump’s 10 percent general tariff will remain in place.
The UK would then be expected to reduce its own 2 percent digital services tax on US tech firms and its 10 percent tariff on car imports, and varying duties on US agricultural goods.
However, Jonathan Haskel, a former member of the Bank of England’s Monetary Policy Committee, told the BBC: “Deals are limited and short-term and partial, just covering a few items. Trade agreements are broad-based and long-term.”
Today’s announcement, he suggested, is more likely to be a deal and may amount to little more than a carve-out – exemptions on certain trade barriers that Trump introduced last month.
On Thursday morning, however, Trump said the agreement was “a full and comprehensive one that will cement the relationship between the United States and the United Kingdom for many years to come”.
While both governments will likely present any agreement announced today as a significant win, it is essentially about returning to the status quo – removing the newly imposed tariff barriers.
It remains to be seen how much any agreement will contribute to both countries’ economic output.
What and how much do the US and UK trade?
In 2023, the UK had an overall trade surplus with the US. The UK reported a surplus of 71.4 billion pounds ($95bn) in goods and services. Most of that headroom came from services, however.
On the goods side, the UK exported 15.3 percent of its goods to the US in 2023 – amounting to roughly 60 billion pounds ($80bn).
Machinery and transport equipment accounted for the largest share, at 27 billion pounds ($36bn), ahead of chemicals at 14 billion pounds ($19bn).
On the flipside, the US exported $77.2bn of goods to the UK in 2023. Ten percent of all goods imported by Great Britain came from the US in that year, second only to Germany.
Machinery and transport equipment accounted for the largest share, worth nearly 20 billion pounds ($27bn), followed by fuel – amounting to 18.7 billion pounds ($25bn).
On the services side, the US exported $76bn in services – things like advertising and banking – to the UK in 2023, and imported $170bn in British services. These are unaffected by tariffs.
Could the US deal serve as a blueprint for other US negotiations?
Trump’s top negotiating officials have engaged in a flurry of meetings with trade partners since the president’s “liberation day” tariff announcement on April 2.
Although Trump delayed implementing “reciprocal” tariffs for most countries by 90 days on April 9, he did raise them for China to 145 percent. Beijing, in turn, slapped a 125 percent tariff on US goods.
The reciprocal tariffs, which varied from 10 percent to 39 percent, were designed to hit countries with which Washington has large trade deficits, or that impose heavy tariffs on US goods.
Though Britain was not among the countries hit with these reciprocal tariffs, today’s announcement could set a precedent for other bilateral trade deals.
On Tuesday, Trump said he would review potential trade agreements over the next two weeks to decide which ones to accept. Last week, he said that “we [already] have potential trade deals” with South Korea and Japan.
Following his 90-day reprieve, steep reciprocal tariffs are due to be imposed on US trade partners in early July, leaving country representatives racing to avoid a full-blown trade spat with the world’s number one economy.
What stage of talks has the US reached with other countries?
China
According to data from the Office of the United States Trade Representative, the total goods trade between the US and China stood at an estimated $582.4bn in 2024.
US exports of goods to China totalled $143.5bn while US imports from China totalled $438.9bn. The upshot is that America’s trade deficit with China was $295.4bn last year, 5.8 percent higher ($16.3bn) than in 2023.
US Treasury Secretary Scott Bessent will meet with China’s Vice Premier He Lifeng in Switzerland this weekend for talks, which may be the first step in resolving a trade war between the world’s two largest economies.
Meetings will take place in Geneva, and are expected to address reductions on broad tariffs, duties on specific products, export controls and Trump’s decision to end “de minimis” exemptions on low-value imports.
China’s commerce ministry said last week that it was “evaluating” an offer from Washington. The Geneva meeting will be the first between the two since the announcement of Trump’s trade tariffs in April.
On Tuesday, Bessent told Fox News that “we [the US and China] have a shared interest that isn’t sustainable. And 145 percent and 125 percent is the equivalent of an embargo. We don’t want to decouple. What we want is fair trade.”
Trump has accused China of manipulating its currency to make its exports cheaper. He has also slammed Beijing for adopting what he says are market-interfering practices, such as direct government support for Chinese companies, as well as tax breaks and preferential financing.
European Union
In 2023, the EU exported 502 billion euros worth of goods to the US and imported 344 billion euros of goods from America, amounting to a goods trade surplus in the EU’s favour of 157 billion euros ($177bn).
After Trump temporarily dropped his 20 percent reciprocal tariffs on the EU in April, the EU paused retaliatory duties on 21 billion euros ($24bn) of US goods until July 14, including on Harley-Davidson motorcycles, chicken and clothing.
Since then, Brussels has said it wants to increase US goods imports by 50 billion euros ($57bn) to address the “problem” in their trade relationship.
Maros Sefcovic, the EU’s top negotiator, recently told The Financial Times that the bloc is making “progress” towards striking a deal.
But Sefcovic suggested that the EU would not accept an indefinite 10 percent tariff on its exports as a fair resolution to trade talks. He added that his “ambition” was still to strike a “balanced and fair” deal with the White House.
He also said he wants his US counterparts to take into account US services which are exported to the EU.
The EU experienced a services trade deficit of 109 billion euros ($123bn) with the US in 2023 in terms of services. Brussels exported 319 billion euros ($361bn) in services to the US that year, while importing 427 billion euros ($483bn).
Taking this into account would bring the US overall trade deficit with the EU to about 50 billion euros ($57bn), he said.
The new $57bn US deficit could be closed quickly, Sefcovic added, with deals to purchase more US gas and agricultural products. Talks are currently continuing.
India
In the first three months of 2025, India exported $27.7bn of goods (mainly pharmaceutical and engineering products) to the US, while importing $10.5bn of goods (mainly aircraft and medical goods), meaning a US trade deficit of $17.2bn.
On Tuesday, Trump revealed that India had agreed to drop all tariffs on US imports “to nothing”. New Delhi has not yet issued an official statement confirming Trump’s remarks.
At a White House event alongside Canadian Prime Minister Mark Carney, Trump said, “India has one of the highest tariffs in the world. We are not going to put up with that. They have agreed to drop it to … nothing. They wouldn’t have done that for anybody else but me.”
According to Bloomberg, India has reportedly proposed eliminating tariffs on select US imports – including steel, car parts and pharmaceuticals – as part of ongoing bilateral trade talks with Washington.
India currently imposes tariffs on US imports ranging from 5 percent to 30 percent, depending on the product category.
