The UK and US Governments have agreed a trade deal to reduce import taxes and remove tariffs.

The US has agreed to reduce its imposed car export tariffs from 27.5% to 10% for up to 100,000 UK cars and reduce its 25% tariff on British steel imports to zero.

In return the UK agreed to remove a tariff on US ethanol entering the UK, a reciprocal deal on beef exports, and to create a secure supply chain for pharmaceutical products.

Otherwise, the reciprocal tariff rate of 10% on the UK announced in March, remains in place.

Lindsay James, investment strategist at Quilter, said UK markets still remain in a worse position than six months ago.

“Overall, while we await the details it is clear the UK is in a better trade position with the US compared to yesterday, but things remain much worse than six months ago.

“This deal is an encouraging start in what is now expected to be a longer-term process to move to a more wide-ranging deal. However, it still leaves swathes of exports on higher tariffs than prior to liberation day, whilst UK farmers are unlikely to welcome the increased competition in the agricultural sector.”

Thomas Moore, senior investment director at Aberdeen, said the deal is positive news for equity markets.

He said: "The full details of the US/UK trade deal will emerge gradually over the coming weeks, with specific UK sectors such as automotive and aerospace the clear early beneficiaries. Looking more broadly at the implications of the deal, investors should be reassured that the US is signalling its willingness to hammer out more trade deals. Any thawing in US/China relations would be warmly received by markets. As more deals are signed, this sets up a positive outlook for equity markets as the wall of worry is climbed.”

Chris Cummings, chief executive of the Investment Association said the deal signals further collaboration between the two markets.

He said: "Today's announcement is welcome news for investors in the UK and US, signalling further collaboration on trade between these two key and closely tied markets. The US is an important market for our industry, with UK investment managers looking after £770 billion on behalf of US clients and investing £1.3 trillion into US equities. This deal will build on and strengthen that relationship, benefitting consumers and businesses in both countries, with the potential to boost trade and create jobs." 

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said the US is the winner in the deal.

She said: “News of a UK trade deal hasn’t led to a big Trump bump, instead London’s blue-chip index has struggled to lift out of an afternoon slump. Although Prime Minster Keir Starmer has called it ‘historic’ and President Trump has trumpeted it as ‘a great deal for both countries’, the blanket 10% tariff looks set to be staying in place, which is a disappointment for investors holding out for brighter prospects for the UK economy.

“The pound has also lost ground against the dollar as markets assess the breadth of thedeal. With the blue chip index falling back but stocks on Wall Street rising, it’s an indication it’s being seen as a better deal for the US than the UK.”