Yesterday, May 8, 2025, the U.S. and the United Kingdom announced a trade agreement aimed at lowering certain tariffs and increasing market access. During the White House conference, we observed a sell-off on the GBPUSD pair. However, these moves were generally limited. Here’s a summary of the agreed terms:
Tariff reductions:
- The U.S. lifted tariffs on British steel and aluminum (previously 25%).
- U.S. tariffs on cars from the United Kingdom were reduced from 25% to 10%, with a limit of 100,000 vehicles per year, covering nearly all of the UK’s auto exports to the U.S.
- Other British goods remain subject to a base tariff of 10%.
Market access:
- The UK agreed to lower tariffs on U.S. goods from 5.1% to an average of 1.8%, opening its market to American agricultural products (beef, ethanol, fruits, vegetables, shellfish), as well as chemicals, machinery, and textiles.
- The agreement is expected to create $5 billion in new export opportunities for American farmers and manufacturers, including $700 million in ethanol exports and $250 million in beef exports.
- British farmers gained duty-free access to the U.S. market for 13,000 metric tons of beef.
Other provisions:
- The UK will join the U.S. in imposing 25% tariffs on foreign steel and aluminum, forming a joint tariff framework for these metals.
- U.S. companies will gain easier access to British public procurement, simplified customs procedures, and commitments on intellectual property, labor standards, and environmental protections.
- British airlines are set to purchase $10 billion worth of Boeing aircraft, with duty-free import of Rolls-Royce engines and aircraft parts.
Limitations:
- The agreement does not constitute a full free trade deal and leaves certain issues unresolved, such as the UK’s digital services tax, which the U.S. sought to reduce but was not included in the agreement.
- Both sides will continue negotiations to finalize details and resolve remaining tariff issues.
GBPUSD
During the agreement signing, volatility on the GBPUSD pair was somewhat elevated, but not significantly beyond daily fluctuations. Today, GBPUSD is gaining 0.15%.
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Source: xStation 5
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