The US-UK boutique trade deal: flattery pays off

President Trump described the agreement announced on 8 May as a “massive trade deal.”

A White House press statement on the trade deal is quite modest speaking of a “$5 billion opportunity for U.S. farmers, ranchers and producers,” of streamlining customs procedures for U.S. exports, securing the supply chain for U.S. aerospace manufacturers, and creating a secure supply chain for pharmaceutical products.

The boutique trade deal, as announced, while narrow and sketchy in some areas, gives both leaders boasting rights.

President Trump who has been talking up the “hundreds” of deals that would follow from his decision to put a spanner in the works as far as global trade is concerned can claim a “win.” Getting any trade deal over the line in a little over 100 days into his second administration is a positive.

Sir Keir Starmer has more to point to. The arrangement delivers an important concession for the U.K. auto industry which exported cars worth €11 billion to the US in 2024. The first 100,000 U.K.-made vehicles exported each year to the U.S. will not be subject to the additional 25% tariff on imports of cars and car parts announced earlier in the year by President Trump.

The fact that Rolls-Royce engines and airplane parts exported to the US will have tariff-free access is another positive for the British PM.

The biggest win for Starmer is on steel and aluminium exports. The 25% tariff on imports of both announced by President Trump in January will not apply to the bulk of steel and aluminium exported from the United Kingdom. This is hugely important to U.K. steel manufacturers who have been hanging on by their fingertips. The full Trump tariffs, if applied, would have been the death knell for many firms.

The UK concessions on beef and ethanol imports from the US are a small price for the wins on cars, steel, and aluminum. While the concession has received pushback from the farming sector, the issues that arise are seen as manageable for the U.K.

While the final position on pharmaceuticals exports from Britain to the United States. is not yet known it is suggested that a “significantly preferential treatment for U.K.-origin pharmaceuticals” will be negotiated. A question that remains open is what, if anything, the final agreement will contain on the U.K.’s 2% digital services tax, a thorn in the side for President Trump but a major earner for the UK exchequer.

Getting the deal with the US to this point is a considerable win for the British Prime Minister who has spent much of the time “buttering up” President Trump. While seen as cringe by some, the flattery has paid dividends.

The trade deal announced on 8 May raises questions about the route that the EU has been following. While President Trump and Keir Starmer were announcing “we have an agreement,” the EU Commission was launching a public consultation on U.S. imports that could be the subject of EU countermeasures if EU-U.S. negotiations do not “result in a mutually beneficial outcome.” The following day, commission president Ursula von der Leyen argued that she would only travel to the U.S. for trade talks if a concrete deal is sealed – unfortunate timing.

The transatlantic trade relationship between the U.S. and the EU is probably the most important in the world. The relationship is particularly important for Europe, which enjoys a very significant trade surplus. Instead of highlighting how frustrating the second-term Trump administration policies are, the default position for many EU leaders and commentators, perhaps it is time to apply a little of the strategy that worked for the U.K. While flattery is generally seen as a sub-optimal strategy in the long run, as Keynes famously pointed out, “in the long run we are all dead.”

EUalive’s columnist Dick Roche was the minister of state for European affairs when Ireland conducted the two referendums on the Treaty of Lisbon of the European Union, in 2008 and 2009.

Caption: The Rolls Royce car logo is displayed on a dealership in London, Britain 3 April 2025. [EPA-EFE/NEIL HALL]