UK-US Trade deal 'only first step' to full Free Trade Agreement

Last week's historic trade deal between the US and Britain is "only the first step" towards a more comprehensive Free Trade Agreement, Republican insiders said last night. Despite Donald Trump's genuine admiration for Britain and its institutions, it was his economic war with China that drove the timing. And it is China - along with Trump's prospects in the midterm elections - that will determine whether a fuller deal can be secured before his term as 45th President of the United States ends.

"There are many Republicans - and not just those who are avid supporters of President Trump - for whom the strength of the Special Relationship has been somewhat diluted by Sir Keir Starmer's overtures to China," said one seasoned Republican. The announcement coincided with the 80th anniversary of VE Day, underlining the shared histories of the two nations. But for many in Washington, another event carries more strategic weight: last weekend's high-level US-China talks in Geneva.

The meeting between Treasury Secretary Scott Bessent, Trade Representative Jamieson Greer and China's Vice Premier He Lifeng was the first formal engagement between the two powers since Trump's return to office in January.

"The Wednesday announcement was certainly serendipitous - the US and UK fought shoulder to shoulder during World War Two. But let's be clear: it is the China meeting that determined the timing.

"Trump wants the UK to stand shoulder to shoulder with him against Chinese economic dominance. Going to Geneva with that deal in his pocket showed Xi Jinping that China cannot divide allies."

In Trump's first term, China sought out dialogue during the trade war.

This time, it has taken a firmer stance, vowing to "fight to the end."

Trump hinted he may lower the cumulative 245% tariffs on Chinese goods - the centrepiece of 2 April's so-called Liberation Day strategy - to 80%.

Following the meeting, Trump said "great progress" had been made to reset trade relations btween the two economic giants.

Those Republican views were echoed by Sarah Elliott, director of the UK-US Special Relationship Unit at the Prosperity Institute.

"Wednesday's deal was a big signal to Xi, ahead of the weekend's meeting, of real US-UK alignment - that the Western alliance remains strong," she said.

She added: "What really stood out was the way the British government said this was about national security - that economic security is national security.

"That's a big step for a government that has been openly courting Beijing since coming to power last year."

For British steel - on the verge of collapse after it was abandoned by China last month - and UK car manufacturers, the deal means that 27.5% tariffs are reduced to zero, saving thousands of jobs.

But it has faced criticism in some quarters.

Most of the remaining goods which the UK exports to the US will still face the 10% tariff introduced on 2 April, when Trump launched his global trade war.

And Tory leader Kemi Badenoch pointed out that UK tariffs on US goods, previously at 5.1%, have now been lowered to 1.8%, whereas US tariffs on the UK - previously 3.4% - have increased to the universal 10% applied to all countries.

But the US, too, has shown give-and-take, said Elliott.

"Donald Trump didn't reject Lord Mandelson's bid to become UK ambassador to Washington, despite his China connections and the warnings from the security agencies," she said.

"And then you also have him going along with Starmer's Chagos deal, which makes no sense to anybody. It is strongly opposed by everyone in Trump's cabinet, including Marco Rubio, who now heads the State Department and is also currently Trump's National Security Adviser."

While Trump sees tariffs as a critical revenue-raiser, his decision to put the UK in pole position for a trade deal should not be underestimated.

"Last week's deal shows that Trump is treating the UK in a special way," she said.

"US steel and aluminium will now be traded without tariffs, securing jobs in the UK and ensuring that the UK and US can build critical and defence infrastructure together. Cars and agriculture will also benefit from lower tariffs than initially expected, though these are limited by quotas, which I would like to see removed.

"The UK was chosen for the first deal to be brokered since Liberation Day, when others were in the frame too. It took place on a significant day which highlighted the Special Relationship that he still believes in - and it preceded meetings with the EU and China."

"It is heartening that the United Kingdom is the first country to sign a new US trade deal, especially on the 80th anniversary of VE Day.

"And it is only the starting point to what could become a much more comprehensive deal."