Trump keeps 10% tariffs on UK but cuts taxes on British autos, steel and
aluminum with trade deal
[May 09, 2025] By
JOSH BOAK, CHRIS MEGERIAN and JILL LAWLESS
WASHINGTON (AP) — President Donald Trump agreed Thursday to cut tariffs
on U.K. autos, steel and aluminum in a planned trade deal but played
down the possibility of other nations getting similarly favorable terms
on his import taxes, which are roiling the global economy.
Under the framework agreement, the United Kingdom is to buy more
American beef and ethanol and streamline its customs process for goods
from the United States. But Trump's baseline 10% tariffs against British
goods are to stay in place, and the Republican president suggested that
even higher import taxes would be charged on other countries trying to
reach deals with the U.S.
“That's a low number,” Trump said of the U.K.'s 10% tariff rate, adding
that other countries would face higher tariff rates in their deals
because the U.S. runs trade deficits with them and “in many cases they
didn't treat us right.”
The announcement provided a political victory for U.K. Prime Minister
Keir Starmer and offered a degree of validation for Trump's claims that
his turbulent approach on trade may be able to rebalance the global
economy on his preferred terms. While the deal should improve Britain's
situation relative to when Trump began imposing new tariffs, the world
economy is still mired in the confusion and uncertainty unleashed by the
president's import taxes. The deal with the U.K. would be a resonant but
small step toward greater clarity given that Britain represents a
fraction of U.S. imports.
The U.S. president talked up the framework to reporters in the Oval
Office, although the fine print remains in flux.
“In the coming weeks, we’ll have it all very conclusive,” Trump said.
The president said the agreement would lead to more beef and ethanol
exports to the U.K., and streamline the processing of U.S. goods through
customs. Commerce Secretary Howard Lutnick said the baseline 10% tariffs
would stay in place and said an unspecified British company would be
announcing the purchase of $10 billion in aircraft from Boeing.
Cars, steel and olive oil
U.K. officials said Trump's auto tariffs would go from 27.5% to 10% on a
quota of 100,000 vehicles and the import taxes on steel and aluminum
would go from 25% to zero. Starmer said Britain would preserve its
health and safety standards on food products.
The U.K. government also said it would also reduce tariffs on 2,500 U.S.
products such as olive oil, wine and sports equipment, bringing down the
average tariff rate 1.8%.
Starmer, speaking over the phone to Trump while reporters listened in,
stressed the importance of the relationship between the two countries as
the anniversary of the Allies' World War II victory in Europe was being
commemorated.
“To be able to announce this great deal, on the same day 80 years
forward, almost at the same hour,” Starmer said, “I think is incredibly
important and makes this truly historic.”
Starmer later spoke to workers at a Jaguar Land Rover plant and promoted
the deal, which he said would protect thousands of auto jobs. He told
the workers that “this is just the start,” saying “we are hammering out
further details to reduce barriers to trade with the United States and
across the world.”
While celebrating the planned deal, Trump talked up the U.S. economy's
future despite worrisome signs of a possible slowdown and increase in
inflation that could hurt most Americans' financial well-being and lead
to layoffs.
The president said the public should buy into the stock market because
the U.S. was about to go up like a “rocket ship," even as he dismissed
reports of fewer container ships docking in the U.S. and companies
warning of price increases if the tariffs remain.
Trump said that fewer container ships arriving from China meant “we lose
less money” from the trade deficit, even though the goods in those ships
are used by U.S. manufacturers and sold by retailers in ways that can
support jobs while holding down prices.
Asked about companies saying they would need to raise prices because of
the tariffs, Trump said, “I think they’re saying that just to try and
negotiate deals with me.” Trump suggested that he might put 100% tariffs
on Mattel toys if they don't relocate their factories to the United
States.
[to top of second column] |
President Donald Trump, center, with from l-r., Commerce Secretary
Howard Lutnick, Vice President JD Vance, and Britian's ambassador to
the United States Peter Mandelson, making remarks on a trade deal
between U.S. and U.K. in the Oval Office of the White House,
Thursday, May 8, 2025, in Washington. (AP Photo/Evan Vucci)
 Trump has maintained that there is
“virtually” no inflation. The Federal Reserve's preferred inflation
measure has increased at 2.3% annually, slightly higher than the
central bank's 2% target.
The U.S. president on Thursday said that Fed Chair Jerome Powell
should cut the Fed's benchmark interest rates that are designed to
manage inflation, saying that Powell was holding the Fed's rates at
current levels instead of slashing them because “he's not in love
with me.” Powell warned at a Wednesday news conference that the
tariffs were creating uncertainty and the Fed could afford to wait
until more data shows the impacts on the economy.
Looking for a deal since Brexit
The U.S. already runs a trade surplus with the U.K., making it a bit
easier to find common ground at a time when Trump has staked his
tariffs on eliminating the annual trade deficits with multiple
nations he says have taken advantage of the U.S.
A British government official, insisting on anonymity to discuss the
talks, said the U.K. planned to seek greater trade liberalization as
negotiations continue, such that the effective tariff rate charged
by the U.S. could be lower than the 10% baseline.
The official said the talks have been built on the longstanding
closeness between the two nations and, when in discussions with the
Trump administration, the key was to be charming and know how to say
“no” nicely.
The official said Trump had invited the British government to agree
to a trade deal before April 2, but the president changed his mind
so that he could impose his sweeping “Liberation Day” tariffs. That
statement indicates that Trump could have announced some form of
Thursday's agreement weeks earlier.
No new deals have been reached with the United States' largest
trading partners, including Canada, Mexico and China. Trump has left
the highest tariffs in place on China, sparking a confrontation
between the world's two biggest economies. Washington and Beijing
are sending officials to Switzerland this weekend for an initial
round of trade talks.
Trump said Thursday that he "could" lower the 145% rate charged on
Chinese goods if the weekend talks go well.
“Right now, you can’t get any higher," Trump said. "It's at 145, so
we know it’s coming down.”
The U.S. and the U.K. have been aiming to strike a bilateral trade
agreement since the British people voted in 2016 to leave the
European Union, allowing the country to negotiate independently of
the rest of the continent. Then-Prime Minister Boris Johnson touted
a future deal with the U.S. as an incentive for Brexit.
Negotiations started in 2020, during Trump’s first term. But the
talks made little progress under President Joe Biden, a Democrat and
a critic of Brexit. Negotiations resumed after Trump returned to
office in January and intensified in recent weeks.
The U.S. ran a $11.9 billion trade surplus in goods with the U.K.
last year, according to the Census Bureau. The $68 billion in goods
that the U.S. imported from the U.K. last year accounted for just 2%
of all goods imported into the country.
The U.S. is far more important for the U.K. economy. It was
Britain's biggest trading partner last year, according to government
statistics, though the bulk of Britain’s exports to the U.S. are
services rather than goods.
___
Jill Lawless reported from London. Associated Press writer Zeke
Miller contributed to this report.
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