Britain has reached its first deal with the United States since Donald Trump joined the trade war, winning cuts in punitive tariffs on automobile and steel exports, but failed to reverse the flat 10% tax that applies to most commodities.

The U.S. president announced the deal in the Oval Office, and British Prime Minister Sir Kyle Starmer joined by phone, and both leaders praised the strength of relations between the two countries.

However, the scope of the US-UK deal is limited, and many details have to be eliminated, and the end result still puts Britain in a tougher trading relationship with the United States, rather than before Trump introduced global tariffs last month.

U.S. stocks rose after the announcement, and investors were encouraged by further trading (including with China) to limit damage to the taxes that caused the trade. The S&P 500 rose more than 1% to its highest intraday level since March 27.

U.S. Treasury Secretary Scott Bessent and senior Chinese officials plan to meet in Switzerland this weekend in an attempt to reduce the tariff war between the world's two largest economies.

"I will tell you that China is very eager to reach a deal. We will see how this works," Trump said. When asked if he would consider lowering the U.S. import tax rate, the U.S. president replied, "Now, you can't get a higher question. It's 145% (%), so we know it's going down."

What Trump calls "full and comprehensive" U.S.-UK deal will keep most of the UK export tax imposed last month at 10% in the U.S. tax.

It is crucial, however, that the UK has imposed additional restrictions on the 25% additional tariffs on cars and metals previously set by the Trump administration, which is particularly stressful for the UK.

According to the UK government, exports of steel and aluminum in the UK will now have zero ratings, while the top 100,000 British cars sold in the US (the vast majority) will be taxed by 10% each year.

"This historic deal serves British business and British workers, protecting thousands of British jobs in major sectors, including automobile manufacturing and steel," Starmer said.

In exchange, the UK will provide us with a low push quota system to improve the market by farmers and ranchers, but without changing its food standards, paving the way for some beef imports. The UK will eliminate tariffs on U.S. ethanol used to produce beer.

"Our biggest concern is that the agricultural sector is being picked out and bears a heavy burden of removing tariffs from other industries in the economy," said Tom Bradshaw, president of the National Farmers' Union.

Trump and Steamer’s team also agreed to enter into a digital trade agreement to deepen cooperation and address our concerns about the UK’s digital service tax targeting Big Tech, a technology that is always there.

"The United States and Britain have been working hard to reach an agreement, never fully reached an agreement. It has done with the Prime Minister," Trump said at the White House.

Speaking to workers at the Jaguar Land Rover factory in the West Midlands, Starmer said the agreement was the beginning of a process. “It’s a work that is preserved, not a work,” he said. “We will continue to build this agreement.”

He said he also imposed "preferential treatment" on the UK if Trump decides to raise tariffs on pharmaceuticals or other departments, including movies, in the future.

But Andrew Griffith, a conservative trade spokesman, said the deal was disappointing, calling it a "diet Coke agreement, not a real thing." "We're just in trouble," Conservative leader Kemi Badenoch said.

The United States and the United Kingdom can provide a template for negotiations with other countries - the closest people to reaching a deal with Washington with India, Vietnam, Japan and South Korea.

But Trump warned that the U.S. would insist that the overall taxation in countries with large surpluses with U.S. may still be more than 10%. "Some will be higher," he said, adding, "The 10 template is probably the lowest."

The US-UK agreement also raises questions among legal and trade experts about whether it is consistent with the World Trade Organization rules that require equal tariffs.

Ignacio García Bercero, a former European Commission official and now a Bruegel think tank, said the UK's decision to cut tariffs on U.S. exporters without extending the same deal to other countries' legal challenges.

Under the WTO's "most popular country" concept, countries must provide the same tariff rate to all countries, unless reduced through bilateral trade agreements, which cover "basically all trade", was announced by the United Kingdom-U.S. Convention on Thursday.

Bercero added: “It’s about whether the UK offers preferential tariff concessions to the United States.

However, a trade lawyer who declined to be named pointed out that WTO rules allow trade transactions to be phased. "They can say it's the beginning of the free trade agreement negotiations and then it takes 10 to 15 years to 'conclusion'," they said.

Other reports by Kate Duguid in New York