United States and United Kingdom will announce a free trade agreement

After nearly five years of negotiations, British Prime Minister Keir Starmer and U.S. President Donald Trump are about to announce a trade agreement that, although it won't be a full free trade treaty, will represent significant relief from Trump's recent tariff policies.

The agreement, expected to be announced today, is considered a symbolic victory for Starmer, positioning the United Kingdom as the first country to reach a new bilateral pact under Trump's new mandate.

The talks initiated in 2020 sought a free trade agreement, but under the current administration, the focus has shifted toward an agreement centered on emerging technology sectors, such as artificial intelligence, biotechnology, and pharmaceuticals. These sectors, key to the "new industrial revolution," would be at the core of the agreement.

Although the full details haven't been disclosed yet, it is anticipated that the pact will lower some of the tariffs imposed by Trump, particularly those affecting the UK's automotive and metallurgical sectors, currently subject to 25% tariffs. This would especially benefit companies like Jaguar Land Rover, which has its most important export market in the United States.

The United Kingdom exported 59.3 billion pounds in goods to the United States in 2024, importing £57.2 billion, which shows a balanced trade relationship.

Additionally, the trade in services between both countries exceeds £179 billion, with the United Kingdom exporting more than twice what it imports. Financial, technological, and insurance services represent a crucial part of this relationship.

Despite the focus on technology and service sectors, the agreement involves commitments. One of the most highlighted points has been the U.S. pressure to allow the import of agricultural products like chlorinated chicken or hormone-treated meat, which the United Kingdom has flatly rejected.

The British government has assured that quality and animal welfare standards won't be compromised, establishing "red lines" in the negotiation.

Another possible concession would be the reduction of the Digital Services Tax (DST), a 2% tax on the revenues of U.S. tech giants like Meta, Google, and Amazon, which has caused around 800 million pounds annually for the British Treasury. Its adjustment could be part of an exchange to secure tariff reductions on industrial and pharmaceutical goods.

While the agreement represents a significant diplomatic advance, its economic impact could be limited. Experts warn that, even with the reduction of some tariffs, the total value of the benefited sectors amounts to less than 1% of the British GDP. Additionally, the base tariff of 10% on British goods in the United States is likely to remain, which limits the scope of immediate benefit.

Still, this pact positions the United Kingdom favorably compared to other countries that still face full tariffs and could strengthen the strategic relationship with the United States.

It also comes at a key moment, as the United Kingdom prepares for a trade summit with the European Union on May 19, aiming to relaunch economic ties with the bloc.

The agreement also has geopolitical implications: Washington has preferred to deal with London bilaterally, while negotiations with the EU remain tense.

The announcement also comes days after the United Kingdom signed a trade agreement with India, suggesting a renewed focus by Downing Street on establishing global ties post-Brexit.

British business groups, such as the Confederation of British Industry (CBI) and the British Chambers of Commerce (BCC), have welcomed the announcement, highlighting that trade uncertainty and tariffs have negatively affected key sectors. They see this agreement as an opportunity to mitigate damage and strengthen British competitiveness.

However, they have also warned that the government must ensure that any concession is balanced by concrete benefits, and that this shouldn't be the final stage of the process, but a step toward more ambitious trade relations.

In the political arena, opposition figures and members of Parliament have expressed concerns about the possibility of compromising food and environmental standards. Nevertheless, the government has reiterated that these standards won't be lowered as part of the agreement.