Trump Announces Trade Framework With UK, Lowering Barriers

ta0kq5tzyhyjkptv6ntgr)9u_media_dl_1.png ONS

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(Bloomberg) — US President Donald Trump announced a trade framework with the UK, hailing it as a “breakthrough” that will bring down barriers and expand market access for American imports.

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“I’m thrilled to announce that we’ve reached a breakthrough trade deal with the United Kingdom,” Trump said Thursday in the Oval Office. 

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Trump said final details of the pact would still be negotiated over the “coming weeks.” But under the agreement, the UK would fast-track American goods through their customs process and reduce barriers on agricultural, chemical, energy and industrial exports.

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“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,” Trump said.

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The announcement is the first Trump made since imposing high tariffs on dozens of US trading partners. The president later paused those duties temporarily in order to allow nations to reach agreements with the US. 

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“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,” said UK Prime Minister Keir Starmer, who dialed into the event by phone.

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The pact spurred cautious optimism on Wall Street, with stocks up and bonds down amid hopes that the agreement could be a blueprint. 

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Trump cheered the market reaction, and predicted investors would be even more encouraged if Congress passes a law extending his tax cuts, comments that spurred the S&P 500 Index to extend gains to session highs, climbing about 1.5%.

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“If that happens, on top of all of these trade deals that we’re doing, this country will hit a point — you better go out and buy stocks now,” he said. 

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The British deal may provide clues for the shape of potential future agreements with other economies. The terms are limited in scope and they keep in place a 10% baseline tariff, according to Commerce Secretary Howard Lutnick.

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Under the agreement, UK manufacturers would be allowed to send 100,000 cars into the US under a 10% tariff — rather than a 27.5% rate they previously faced after Trump raised duties. 

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“For the UK auto people, this is tens of thousands of jobs that the president agreed that he would protect for them,” Lutnick told reporters.

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Engines and plane parts from Rolls-Royce Holdings PLC will be able to enter the US market without tariffs and a British airline will buy $10 billion worth of Boeing Co. planes, Lutnick said, without naming the carrier.

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British farmers will be given a tariff-free quota for 13,000 metric tons of beef. The UK will not weaken its food standards on American imports, its government said.

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The two sides differed on some key details, pointing to the hastily arranged nature of the agreement. 

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The British government released a statement saying US tariffs on steel and aluminum from the UK will go to zero, but the White House put out its own description less than an hour later saying they “will negotiate an alternative arrangement” to the metals duties and that the agreement creates “a new trading union” on the materials.