Sir Keir Starmer has struck a historic trade agreement with the US that will slash Donald Trump’s tariffs, in what the president hailed as a “great deal for both countries”.
The UK became the first country to reach such an agreement since Mr Trump’s swingeing “Liberation Day” tariffs threw the global economy into turmoil last month.
The prime minister hailed a “fantastic, historic day” as he said the move would “boost British businesses and save thousands of British jobs” and deliver on his promises to protect carmakers and save the UK’s steel industry.
The president extolled how “we got it done” and highlighted how the “special relationship and external bond” will soon be “stronger than ever before”.
The deal will see US tariffs on cars immediately slashed from 27.5 to 10 per cent, up to 100,000 vehicles – almost the total number exported last year. Levies on steel and aluminium will be reduced to zero, however, a general 10 per cent tariff for other goods will remain.
In response, Britain will scrap its tariff on ethanol – which is used to produce beer – coming into the UK from the US.
The Americans said the deal would also see its imports fast-tracked and “exponentially” increase the amount of US beef coming into the UK.
However, No 10 insisted there would be “no weakening of UK food standards on imports” amid fears over US hormone-fed beef and chlorinated chicken.
There had been speculation that the UK would reform the digital services tax as part of a deal. The tax is paid by US tech companies such as Meta and Google on money made from the UK, but No 10 said it would remain unchanged.
There were also no carve-outs for the UK on pharmaceuticals, where 10 per cent reciprocal tariffs remain in place. And it said it would continue to negotiate for possible relief on the 100 per cent levy on TV and films, which the PM has been warned could devastate the UK industry.
But the deal will be seen as a coup for the prime minister, who has resisted calls to retaliate against the US and instead ploughed a diplomatic furrow.
Mr Trump personally praised the Labour leader for getting the deal over the line. He said: “The US and UK have been working for years to try and make a deal, and it never quite got there.
“It did with this prime minister, so I want to just congratulate you.”
He added that the bond between the two countries would “soon be stronger than ever before” in the wake of this new agreement.
Sir Keir also paid tribute to the president’s leadership, adding it was “apt” that the agreement was signed on the 80th anniversary of VE Day, when “the UK and the US stood together as the closest of allies”.
Although Mr Trump described the deal as “full and comprehensive”, it was not the free trade agreement Brexiteers have long argued for and was instead focused on a narrower set of industries.
The pound strengthened against the dollar after the announcement, while the UK’s FTSE 100 saw losses ease back slightly.
But Conservative leader Kemi Badenoch said the UK had been “shafted” when comparing today’s result to the situation before President Trump came to power.
She said: “When Labour negotiates, Britain loses. We cut our tariffs – America tripled theirs. Keir Starmer called this ‘historic’. It’s not historic, we’ve just been shafted!”
Sir Keir appeared to acknowledge that the situation was still worse than before Mr Trump re-entered the White House. But, asked if the new terms were better than six months ago, he said: “The question you should be asking is, is it better than where we were yesterday?”
The agreement comes just days after another long-anticipated trade deal, this time with India, was unveiled on Tuesday in what could end up being a triple whammy of agreements, with a new relationship with the EU expected to be announced at a summit in London on 19 May.
They will be a boost to the Labour leader in the wake of disastrous local election results last week that have led to calls for major policy changes from senior Labour figures, including the reversal of controversial winter fuel payment cuts for millions of pensioners.
Before the details of the deal became public, Washington DC sources told The Independent that the deal was “a face-saving exercise” for President Trump. They said he “almost had his Liz Truss moment with the bond markets” after global markets tumbled, which was only avoided because of his last-minute decision to suspend his tariffs at the behest of his Treasury secretary, Scott Bessent.
Mr Trump did not have the authority to do a full free trade deal without permission from Congress, the source added.
The deal means Sir Keir has succeeded where a string of previous prime ministers – Theresa May, Boris Johnson, Liz Truss and Rishi Sunak – failed.
Earlier this week, Sir Keir struck Britain’s biggest post-Brexit trade deal in a “landmark” agreement with India that will boost trade with the country by £25.5bn.
The prime minister said the agreement, which focuses on whisky, gin, cars and cosmetics, would boost the economy by billions of pounds and cut prices for consumers.
