The art of the possible: Britain settles for quick win in US trade deal

Britain spent months buttering up US President Donald Trump, keeping calm in the face of his tariff-led assault on global trade, before deciding late on Wednesday to drop its demands for a comprehensive deal and take a quick but limited win instead.

Britain had been in talks with Trump's administration for months in a bid to avoid, and then to lower, the 10% US baseline tariffs it faced on all goods, and the 25% levies imposed on cars and steel.

Late on Wednesday, as business minister Jonathan Reynolds dined with London's business and finance leaders and Prime Minister Keir Starmer was watching his beloved soccer team, they agreed to strike a deal that would improve access for the worst-hit sectors, rather than do a more comprehensive deal.

“Because we haven't got that full agreement in place, being able to have the announcement on the sectoral side is obviously of crucial importance,” Reynolds told reporters on Thursday, citing the impact of the tariffs on carmakers in particular.

The British government said the limited deal to protect cars and steel is a start, and the two sides will continue to negotiate on a deal to eliminate Trump's 10% baseline on most products. But a fully fledged free trade agreement, a prize much longed-for by those who backed Britain's departure from the EU, is a distant prospect.

Officials on the two sides said Britain had been able to strike the first deal with Trump to lower tariffs because the countries had relatively balanced trade and because Britain had not retaliated like others with its own tariffs.

Trump's deep affinity for Britain — his mother's birthplace — was also a factor, as was the British government's willingness to flatter Trump at all times, for instance with a royal invitation to honour Trump with a second state visit during Starmer's trip to Washington in February.

Starmer dialled into the Oval Office announcement to thank Trump, saying it was appropriate the deal was clinched on the 80th anniversary of the end of World War 2 in Europe.

“We've been absolutely the closest of allies for so many years, keeping the peace through the close alliance, the friendship, and we add to that the deal on trade and the economy,” Starmer told Trump.

“I want to thank you for your leadership on that, Donald.”

One British official said Starmer and Trump held a “warm” conversation on Wednesday night to seal the deal, while a second added Trump used the final call to try to secure more concessions from Britain to benefit American farmers.

“He likes to chisel away and get everything he wants,” the official said of Trump.

“He sort of wanted a lot without paying for it, so he only got some of it.”

The US has been under pressure from investors to strike deals to de-escalate its tariff war after Trump's often chaotic policymaking upended global trade with friends and foe alike, threatening to stoke inflation and start a recession.

The tariffs had also put pressure on Starmer, with Jaguar Land Rover initially pausing exports to the US, and his government forced to seize control of British Steel to keep it operating.

Under the terms of the new deal, tariffs on 100,000 British-made cars a year will go to 10% from 27.5%, while tariffs on steel will go to zero from 25%.

In return, Britain agreed new reciprocal market access for beef though it will maintain stringent food standards that had been a red line in talks despite “quite theological” and repeated pressure by the US side to lower them, the second British official said. Britain also removed the tariff on ethanol.

Economists, affected sectors including farmers and trade experts welcomed the deal, but urged the government to go further, while the office of the US trade representative expressed disappointment that Britain refused to scrap its digital services tax, illustrating some of the sharp disagreements that remain.

A key figure in talks was Peter Mandelson, a veteran from Tony Blair's Labour government and former European trade commissioner, who Starmer appointed as an ambassador to Washington.

Known as a smooth talker and seen as an unusually political appointment to the role, Mandelson was tasked with handling a “new chapter” in bilateral relations, and he stood behind Trump's left shoulder as he announced the deal.

Starmer admitted the final conclusion of talks caught him off guard.

“I didn't know the exact day. I wouldn't have been having my phone call with President Trump halfway through the second half of the Arsenal-PSG game had I planned it better, but that's the way it turned out,” Starmer told reporters, referring to the north London side who were knocked out of the Champions League on Wednesday night.

Reuters