U.S. and UK leaders signed a "historic" trade deal between the two sides on Thursday, but experts warned that it still puts Britain in the face of export tariffs before Donald Trump took office.

Although the 10% global tariffs imposed by Trump in April remained, the UK won important benefits to steel and automatic tariffs, with Trump increasing 25% in February and March.

In return, the UK granted the U.S. greater access to beef, ethanol and industrial products, raising concerns that the UK market risk flooded U.S. products.

UK negotiators avoid entering politically controversial areas, such as reducing UK digital service tax, opening up health care markets to US companies, or changing the UK food standard rules to allow products such as chlorinated chicken and hormone-treated beef.

Mattia di Ubaldo, chief researcher at the University of Sussex International Trade, said the deal puts Britain's bilateral trade "in a worse position" compared to the United States' bilateral trade, but now has a competitive advantage over some other countries.

economy

The deal will make the tariffs most risky, but have no impact on the overall economic outlook for the U.S. or the UK, economists say. They suggest that the United States will also work to reach meaningful deals with other countries.

Oxford economic consulting firm Michael Pearce said limited relief for automotive, steel and aluminum tariffs would “reduce” at the effective U.S. tariff rate, but Oxford economic consulting firm Michael Pearce said the average tariff will remain in double digits, hitting U.S. consumers.

"We don't want this to have a significant impact on overall GDP," said Pimco's economist Peder Beck-Friis. "Ongoing fiscal tightening and (Bank of England) policies remain important drivers of the outlook."

Paul Dales, a British economist in UK capital economics, said the U.S. import tariff rate for effective U.S. imports in the UK will reach about 11%, much higher than the current 1% last year due to the arrangements. That's an improvement of 13% before Thursday's deal, but it depends heavily on future measures for key sectors such as medicines.

car

The deal is widely welcomed by UK auto executives, which could potential tariffs on the top 100,000 vehicles shipped from the UK to 27.5 per cent, to 10 per cent.

Last year, new quotas accounted for almost 101,870 cars exported to the U.S., according to the Automobile Manufacturers and Merchant Association.

"The application of these tariffs is a serious threat to British auto exporters, so the deal will provide much-needed relief," said Mike Hawes, CEO of SMMT.

Adrian Mardell, CEO of Jaguar Land Rover, the UK's largest auto exporter, called the deal a "significant progress" in providing "certainty that we need to continue investing."

But he warned that "this is not a job done for the UK" and hopes that future negotiations will reduce tariffs in a timely manner.

"It's not without challenges, but it can be managed," another executive said.

Although the UK's auto industry relies heavily on European exports, cars are the largest British exporter in the United States, accounting for £6.4 billion in sales. It is also the largest market for high-end brands, such as JLR’s Range Rover, as well as Bentley and McLaren, which do not have any manufacturing operations in the United States.

aerospace

The UK also received a deal that would allow Rolls-Royce to export its engines to the U.S. “Tax-free,” although executives said they still want all aerospace parts to be tax-free.

Rolls-Royce shares rose 3.6% after the news. Meanwhile, U.S. aircraft maker Boeing rose 2.8% on Thursday after U.S. Commerce Secretary Howard Lutnick said that British Airways were planning to buy $10 billion worth of corporate aircraft. British Airways boss IAG completed a deal Thursday night to buy 787 Boeing aircraft, people familiar with the deal confirmed.

The aerospace industry, a key user of steel and aluminum, has been eager to adapt to Trump's trade war, and its costs have been reduced through its integrated supply chain.

Kevin Craven, CEO of ADS, aerospace and defense trade agency, said that while basic tariffs will "stay in place, eliminating additional tariffs on steel and aluminum is a major achievement".

He added: "While we await further specific details, tariffs on engines and aerospace parts are reportedly also very welcome news."

Agriculture and food

Farmers welcomed the UK government’s commitment to maintaining UK food standards and ensuring reciprocal access to the beef trade, but warned that ethanol was flooding into the UK.

The White House said the deal would "significantly expand" UK's U.S. market access, citing a $700 million opportunity for ethanol exports and a $250 million opportunity for other agricultural products, such as beef.

"Our biggest concern is that two agricultural sectors have been picked out, taking on the heavy burden of removing tariffs from other industries in the economy," said Tom Bradshaw, president of the National Farmers Union.

NFU said biofuels are "extremely important" to the UK's farming sector. "To fully liberalize our ethanol market can be translated into the loss of this profitable channel for our farming growers," it said. Bioethanol in the UK is mainly produced by domestic wheat and imported corn.

Downing Street said the UK and the US have agreed to a "countdown" market channel on beef, with British farmers receiving a tax-free quota of 13,000 metric tons.

The White House said the UK "unfairly" maintains "the highest tax rate for meat, poultry and dairy products" in addition to maintaining non-scientific, non-scientific standards, which has adversely affected U.S. exports."

Before Trump imposed a 10% tax rate, the U.S. imposed an average agricultural tariff on UK imports 5%, while the U.K. average tariff was 9.2%.

The Food and Beverage Federation said the 10% tariff would still affect UK food exporters, many of which are smaller businesses, the industry hall of the food manufacturers said. The industry sent £2.7 billion worth of goods to the United States in 2024.

steel

Weeks after the British government stepped in to save the remaining steel blast furnaces in the UK, the industry welcomed the deal to remove tariffs on U.S. exports as "very important".

In February weeks after taking office, Trump reached a deal between the United Kingdom and the United States under former President Joe Biden and issued a 25% tariff on all British steel and aluminum imports to the United States.

Trade agency UK Steel stressed that it still needs to clarify the terms of the transaction, especially whether steel has any conditions to meet zero percent taxes and when changes in the rules will take effect.

The United States is the second largest market for British steel exports after Europe. In 2024, the UK exported 180,000 tons of semi-finished and finished steel to the United States, worth 370 million pounds. This accounts for 7% of the UK's total steel exports and is worth 9%.

Pharmaceuticals

The UK claims that the U.S. has agreed to give preferential treatment to the UK for any tariffs imposed, as part of an ongoing investigation in Washington about whether imports of imported drugs and semiconductors threaten national security.

Starmer calls the concession “everything happens in the future”, a step to protecting the UK, referring to the fact that Trump is still considering whether to impose tariffs on drugs.

London added that the deal also lays the foundation for future UK-US technology partnerships, where the UK can collaborate in areas such as biotechnology, life sciences, quantum computing, nuclear fusion, aerospace and space.

These promises are on the pharmaceutical industry that will now avoid the worst effects of future Trump tariffs, although the industry remains cautious without more details.

"It's a nice step forward, but we just need to learn more about it," said one industry figure. "All of this adds up, and it lacks clarity."

Reports by Peter Foster, Kana Inagaki, Sylvia Pfeifer, Madeleine Speed, Michael Peel, Gillian Plimmer, Sam Fleming, Delphine Strauss and Philip Georgiadis