US President Donald Trump and British Prime Minister Keir Starmer announced a "historic" deal on Thursday to lower tariffs on some imports and give each nation access to the other's markets for agricultural goods.
Speaking from the Oval Office, the US President said the agreement was a "great deal for both countries", though the final details were still being worked out.
"With this deal, the UK joins the United States in affirming that reciprocity and fairness is an essential and vital principle of international trade," Mr Trump said, adding that the UK would also reduce or eliminate non-tariff barriers that unfairly discriminated against American products.
Mr Starmer, who participated in the announcement remotely, called it "a really fantastic, historic day in which we can announce the deal between our two great countries, and I think it's a real tribute to the history that we have of working so closely together".
The announcement came amid commemorations of the 80th anniversary of victory in Europe in the Second World War. Mr Trump said it was a great honour for the first trade agreement to be announced with the UK, given the long history and relationship between the two countries.
He said the deal would bring the UK into economic security alignment with the US and called the country one of the greatest allies of his nation. The President added that the agreement would cement the relationship between the US and the UK for many years to come.
The announcement comes as Mr Trump has faced pressure to de-escalate the trade war he instigated when he announced major tariffs on long-time allies and foes, in a move that caused concern over a rise in prices in the US and the possibility of a recession. US financial markets soared on news of the deal, while the FTSE was mixed.
On April 2, Mr Trump, whose second term in office began in January, imposed a 10 per cent tariff on most countries, along with far higher rates on some, arguing the move would enrich the US and balance trade deficits. Days later, he issued a 90-day pause on tariffs for most countries.
The scope of the trade deal with the US could set a benchmark for other nations. The UK was set at the lowest tier of the universal tariffs, at 10 per cent. Other export categories set at 25 per cent for the UK were partially eased in the agreement, including the biggest single product, cars. The White House said that only the 10 per cent flat rate would remain in place.
A UK government official said that as well as dealing with steel and car tariffs, the deal would contain positions for discussions over possible future tariffs in the pharmaceuticals sector. Mr Trump said national security considerations underpinned vital parts of the agreement.
"Steel is a big factor, both countries will become stronger with steel and things necessary for the military," the President said.
Talks on cementing further reductions in tariffs are set out in the framework agreement. "There will be further negotiations to come," the official said.
US Secretary of State Marco Rubio called the agreement an "important step towards fair and reciprocal trade with our partners around the world".
In London, Mr Starmer received a triple boost from the trade agreement, defence commitments and a cut in interest rates.
Speaking ahead of the announcement at the London Defence Conference, Mr Starmer addressed the weakening of the US military support for the Europeans with an embrace of the UK's own military build-up, saying it would create jobs, wealth and prosperity.
"Our task now is to seize the defence dividend – felt directly in the pockets of working people, rebuilding our industrial base and creating the jobs of the future," he said.
Lord Walney, a former Labour MP who is close to the defence industry, told The National that Mr Starmer's agenda was being defined by the industrial agenda flowing from increased defence spending. "He's becoming the wartime leader we never knew we needed until now," he said.
In his speech, Mr Starmer said defence spending was rising by more than £13 billion year on year, which would flow through to factory orders in the UK.
The UK government had pursued a deal with the US to reduce the impact of the sweeping tariffs in a series of meetings that included Mr Starmer's trip to the White House in late February.
The ground rules for the talks on the US included ruling out full exemptions for British trade. The UK government ruled out lower food standards to allow more US agricultural products into the country, or watering down the Online Safety Act, which some in the US regard as placing restrictions on freedom of speech.
Earlier this week the UK revealed it had agreed a trade agreement with India, which Mr Starmer hailed as a “landmark deal”.
Speaking after announcing a quarter-point cut in UK interest rates, Andrew Bailey, the governor of the Bank of England, welcomed the news and said it would reduce uncertainty for business.
“The UK is, though, a very open economy and is affected by the tariffs affecting other economies," he said. "I say that because I hope the UK agreement, if it is the case this afternoon, is the first of many. It is excellent that the UK is leading the way and I do congratulate all those involved.”
