US signs first post-tariff trade deal with nation – but Australia will be disappointed at the terms

The US has inked its first post tariff trade deal with the United Kingdom the beneficiary – but there is one detail that will disappoint Australia.

Donald Trump has announced his first post-tariff trade agreement in a major win for the US President.

In a joint announcement on Thursday, the US and UK said it was a “historic deal” that will lower red tape between the two allies.

It will also set the tone for further trade agreements with the US. Which is why it will be disappointing to Australia.

MORE: Aussies to get $5k back amid US tariffs

“It’s a great deal for both countries,” said Mr Trump in the Oval Office but with UK Prime Minister Sir Kier Starmer awkwardly joining the event via a speaker phone from a British car factory.

The deal was reportedly thrashed out at the last minute when Mr Trump interrupted Mr Starmer watching a football match.

“The UK is truly one of our great allies,” said Mr Trump.

“Lots of people say our greatest ally. I don’t want to insult people by saying that, but I can say it’s certainly one of our greatest”.

But the UK opposition called it a “Diet Coke deal – not the real thing”. It’s been noted that the terms of the deal are worse than the access Britain enjoyed to American markets prior to Mr Trump’s “Liberation Day” tariffs.

The agreement, which has yet to be fully worked out, will reduce tariffs on British steel and aluminium exports to the US to zero. Aircraft engines and parts will also see no tariffs. One of the world's biggest aeroplane engine makers is the UK’s Rolls-Royce.

Taxes on up to 100,000 British cars exported annually to the US will be reduced from 27.5 per cent to 10 per cent.

US products such as beef and ethanol will have more access to the UK market.

President Donald Trump, centre, with from l-r., Commerce Secretary Howard Lutnick, Vice President JD Vance, and Britain's 's ambassador to the United States Peter Mandelson, making remarks on a trade deal between U.S. and U.K. in the Oval Office of the White House. (AP Photo/Evan Vucci)

Australia disappointment

But to the dismay of the UK – and no doubt Australia – the US’ so called “baseline” tariffs of 10 per cent will remain on most products.

Australia and the UK both buy more from the US then they sell to it. As such the 10 per cent across-the-board tariff both have been whacked with never seemed to make sense. It was hoped that any deals for countries with a trade deficit with the US might see that tariff axed altogether.

But Britain’s deal suggests it’s here to stay. The best Australia can be hope for is zero or lower tariffs in some sectors.

Indeed, US commerce secretary Howard Lutnick appeared to revel in the fact the baseline tariff remained.

“We still have our 10 per cent tariff on which will produce $US6 billion of revenue for the United States.”

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Britain's Prime Minister Keir Starmer was in the middle of watching a football match when Donald Trump called to say a deal was on. (Photo by Alberto Pezzali – WPA Pool/Getty Images)

Trump interrupted UK PM watching football match

According to media reports, the US-UK deal was finalised unexpectedly quickly when Mr Trump called Mr Starmer at around 9.30pm on Wednesday night, UK time.

The UK PM was engrossed in the second half of a Champions League football match between his beloved Arsenal and Paris St-Germain when Mr Trump dragged him away.

“Thank you very much indeed (Mr President) for that very typical 11th hour intervention demanding even more out of this deal than any of us expected,” an extremely droll British Ambassador to Washington DC Peter Mandelson told Mr Trump in the Oval Office.

“The Prime Minister was delighted to take that call,” he added dryly, suggesting Mr Starmer was far from actually delighted.

Mr Trump was all smiles and told Mr Mandelson he had a “beautiful accent,” a compliment he gave to Mr Starmer too when he was in Washington.

US President Donald Trump shakes hands with British ambassador to the United States Peter Mandelson. (Photo by Jim WATSON / AFP)

Mr Starmer dialled into the Oval Office announcement meeting from a Jaguar Land Rover car factory near the British city of Birmingham. Luxury cars are the UK’s biggest export to the US.

The PM noted the deal came on the 80th anniversary of Victory in Europe Day when the Second World War ended due to alliance of the UK and US.

“There are no two countries that are closer than our two countries, and now we take this into new and important territory,” he said.

“Yes we can finish working out some of the details, but there’s a fantastic platform here”.

‘Diet Coke deal’

UK opposition leader Kemi Badenoch was not impressed. On social media, she said “When Labour negotiates, Britain's loses. Keir Starmer called this ‘historic’. It’s not historic, we’ve just been shafted!”

UK shadow trade secretary Andrew Griffith said it was a “Diet Coke deal, not the real thing”.

But he conceded, we “do welcome the news of a reduction in selected tariffs on things like automotive exports and steel today. Any reduction is better than no reduction”.

US markets shifted up slightly due to the deal with the Dow Jones 0.62 per cent higher at the end of the day. The Nasdaq finished 1.07 per cent higher.

UK aircraft parts, like Rolls Royce engines, will be exempt for US tariffs. (Photo by Peter Nicholls/Getty Images)

Earlier, Mr Trump sad the agreement with Britain was “full and comprehensive” and would “cement the relationship between the United States and the United Kingdom for many years to come.

“Because of our long time history and allegiance together, it is a great honour to have the United Kingdom as our FIRST announcement.

“Many other deals, which are in serious stages of negotiation, to follow!”

The UK withdrew from the European Union in January 2020 meaning it can now ink trade deals without referring to Brussels. But the EU remains a bigger trading partner for Britain than the US.

Cars are the UK’s number one export to the US, from manufacturers like Jaguar, Land Rover, Rolls Royce and BMW’s Mini line.

Pharmaceuticals, from big manufacturers including AstraZeneca and GlaxoSmithKline, are its next biggest export.

Originally published as US signs first post-tariff trade deal with nation – but Australia will be disappointed at the terms