President Donald Trump said he would make a significant trade announcement Thursday with the United Kingdom, yet another sign of some possible relief from historically high tariffs that have threatened serious damage to the US and global economies.
“Big News Conference tomorrow morning at 10:00 A.M., The Oval Office, concerning a MAJOR TRADE DEAL WITH REPRESENTATIVES OF A BIG, AND HIGHLY RESPECTED, COUNTRY. THE FIRST OF MANY!!!” Trump posted Wednesday night on Truth Social.
Trump said the deal with the UK would be substantial.
“The agreement with the United Kingdom is a full and comprehensive one that will cement the relationship between the United States and the United Kingdom for many years to come,” Trump said in a subsequent post Thursday morning. “Because of our long time history and allegiance together, it is a great honor to have the United Kingdom as our FIRST announcement. Many other deals, which are in serious stages of negotiation, to follow!”
“This should be a very big and exciting day for the United States of America and the United Kingdom,” he said in a separate message.
However, the announcement with the UK will be limited in scope, heavy on future commitments and leave in place the existing 10% universal tariffs Trump placed on virtually all goods coming into the United States during his “Liberation Day” announcement on April 2, according to a US and UK official.
The officials stressed that there were still some details in flux and nothing would be finalized until Trump’s announcement. But the outlines of that announcement include a move to ease the burden of Trump’s 25% auto and steel tariffs on the UK and develop a concrete pathway to a broader trade pact.
A White House spokesperson declined to comment beyond Trump’s multiple Truth Social posts on the announcement.
British Prime Minister Keir Starmer said he will make a statement about the outcome of trade talks with the United States later on Thursday. Speaking at a conference in London, he said: “Talks with the US have been ongoing and you’ll hear more from me about that later today.” Starmer will not be with Trump for the announcement due to existing schedule commitments.
Starmer has made the pursuit of a deal with Trump a key component of the bilateral relationship and made a point of elevating trade as key focus in his closed-door discussions with Trump during a visit to the White House in February. UK officials have expressed keen interest in a wide-ranging trade deal, but in recent weeks have taken a more targeted approach, pressing the administration on market access and options to ease Trump’s 25% auto and steel tariffs.
Financial markets cheered the news of a deal. Dow futures rose nearly 400 points, or 0.9%. The broader S&P 500 futures were up 1.1%, and Nasdaq futures were 1.5% higher. The FTSE 100 rose 0.3% after the trade news and a rate-cut announcement from the Bank of England earlier in the day Thursday.
Not a real ‘deal’
Despite the administration’s rhetoric that it is in advanced trade negotiations with more than a dozen countries, actual trade deals take significant time, often years, to hash out. They typically involve incredibly complex agreements, delving into the minutiae of various goods and non-tariff barriers. They often involve significant political considerations, as various parties seek to protect voters with special interests.
Instead, the “deal” Trump announced is more like a memorandum of understanding. That may result in lower tariffs on one particular country’s goods in the near term, but they’ll do little that amounts to a substantial economic win for quite some time.
In return for the United States easing the burden of the steel and aluminum tariffs on the United Kingdom, UK officials have proposed easing digital tax levies on large US tech companies and a concrete negotiating pathway to a more wide-ranging deal, the people said.
The announcement surprised some UK officials, who viewed recent weeks of talks as productive, but not reflective of an imminent agreement.
“This is expected to be a ‘heads of terms’ agreement which sets the broad contours of the arrangement,” JPMorgan analyst Allan Monks wrote in a note to clients Thursday. “The full details are yet to be determined bilaterally and will follow further negotiations”
JPMorgan said the scope of the deal appears limited, because US tariffs on the UK are expected to remain higher than they were before Trump’s “Liberation Day” announcement on April 2. The economic benefit to the United Kingdom will be small, Monks said.
More deals to come
This is just a single agreement. But the framework of a deal, however, provides a pathway for other countries to reach agreements with the United States that could lower their tax burdens.
Trump’s “reciprocal” tariffs that went into effect April 7 and were paused for 90 days on April 9 affect dozens of countries. A hundred or so more are subject to the 10% universal tariff. The administration can’t possibly get those all done by July 8.
US officials described the rapid push towards an announcement as a reflection of Trump’s view of the UK offer as well as his long-standing regard for the “special relationship” underpinning the two close allies. He’s also quickly developed an appreciation for Starmer, one of the people said.
The broader economic and geopolitical dynamics have also been a factor in recent days, though administration officials have downplayed the extent. Trump is keenly aware that foreign leaders, business executives and, just this week, the Federal Reserve chair are all anxiously awaiting any sign of progress in the ongoing negotiations.
“The 90-day tariff pause, which is now roughly 25% over, provides little time for the typical back-and-forth trade discussions that require months if not years to craft a trade deal,” said Jacob Jensen, trade policy analyst at the American Action Forum, a center-right policy institute.
“There is a significant difference if these deals are official, written trade agreements rather than verbal commitments to buy more US products, as one has long-term economic implications and the other can be ignored down the line,” he added.
Trump said last month he would not extend the tariffs a second time — and, in fact, may act sooner to reinstate some tariffs for countries with whom his administration cannot reach an agreement, perhaps in a matter of a couple weeks.
“It will be difficult for the US trade representative to negotiate potentially 100 separate trade agreements within 90 days, meaning President Trump must soon determine whether tariffs will be reinstated or delayed further,” Jensen said.
And even if deals are ultimately completed with all countries, there’s no guarantee Trump would keep them. For example, Trump, in his first term, was instrumental in negotiating the USMCA free trade agreement with Canada and Mexico, only to abandon it in his second term, charging an on-again, off-again 25% tariff on some Mexican and Canadian goods. And by placing significant tariffs on virtually all goods coming into the United States, Trump also blew up a number of existing trade deals with allies.
Signs of de-escalation
For weeks, Trump officials have said they are talking to more than a dozen countries and are nearing a deal – and they are in advanced negotiations with India, the UK, South Korea and Japan. But Trump has frequently said he is in no rush to sign a deal, claiming that countries have been “ripping off” America for years and the high tariffs the United States has imposed will help balance trade.
Trump’s announcement of a trade deal with the UK is the second significant sign this week that the administration may be open to negotiations that would ultimately lower some tariffs on foreign nations.
On Tuesday, Treasury Secretary Scott Bessent said that he and US Trade Representative Jamieson Greer will both travel to Geneva, Switzerland, where they will meet their Chinese counterparts.
Although Bessent told Fox News not to expect a major trade deal from the meetings, he acknowledged it was an important step in negotiations and could de-escalate tensions that have led the United States to place at least a 145% tariff on most Chinese goods. In turn, China has placed a 125% tariff on US goods.
Trump, however, on Wednesday said he would not lower the high tariffs on China in advance of discussions, which Beijing has previously said was a pre-condition for talks.
When asked in the Oval Office whether he was open to pulling back the historically high tariffs to get China to the negotiating table, Trump replied simply with: “No.”
Nevertheless, any thaw in the trade war could be a welcome sign for businesses and consumers in both countries and around the globe.
The punishing tariffs have already damaged economies around the world — particularly America’s. The US economy went into reverse in the first quarter, its first contraction in three years, as businesses stockpiled goods in anticipation of Trump’s “Liberation Day” tariffs, which began in the second quarter.
Although the China-US trade standoff is by far the most aggressive, Trump has imposed large tariffs on most other countries around the world too: a 10% universal tariff on virtually all goods entering the United States, plus 25% tariffs on steel, aluminum, autos, auto parts and some goods from Mexico and Canada.
So the world will be watching Thursday’s announcement and the US-China talks this weekend with anticipation.
Federal Reserve Chair Jerome Powell on Wednesday said at a press conference that tariffs could do serious damage to America’s economy. But he said the trade talks the United States is holding with foreign countries could prevent the worst-case scenario.
Global economists at the International Monetary Fund, OECD and World Bank have all predicted that Trump’s trade war would have disastrous effects on the global economy, slowing growth dramatically in some countries, while reigniting inflation. Many US economists and large banks predict the United States could enter a recession this year.
This story has been updated with additional developments and context.
Matt Wells contributed reporting.
