UK-US Trade Deal Gains Momentum, But Details—and Tariffs—Remain Sticking Points

LONDON – Optimism is building around the possibility of a new UK-US trade agreement, following comments from US Vice-President JD Vance, who suggested there’s a “good chance” of striking a deal with Britain—one that might prove easier than negotiations with other European nations.

Vance praised what he called a “much more reciprocal relationship” between the UK and the US, raising hopes on both sides of the Atlantic for an economic breakthrough. However, officials and analysts warn that while the political tone may be warm, the substance and scope of such a deal remain unclear.

“Nobody wants tariffs. No one wants a tariff war. We want to secure a deal with the US,” said Sarah Jones, UK Minister for Business and Trade, in response to Vance’s remarks. She confirmed that talks were ongoing but declined to provide a concrete timeline.

What Kind of “Deal”?

Following Prime Minister Sir Keir Starmer’s February visit to the White House, UK officials pointedly referred to the discussions as involving an “economic deal”—not a comprehensive free trade agreement (FTA). The term signals a narrower, more targeted arrangement likely focused on technology, science, and AI cooperation, rather than sweeping tariff reductions or harmonized trade rules across all sectors.

This is a notable shift from negotiations during Trump’s first term, which fell apart when talks ran aground over pharmaceutical pricing and agricultural standards. At the time, US trade officials were also gauging how closely the UK would align with European Union rules post-Brexit.

Now, the stakes are different—and arguably higher.

Tariffs and Trade Friction

The US decision to impose a 10% blanket tariff on UK imports as part of its new "reciprocal tariffs" policy has complicated matters. While other countries—particularly in East Asia—have been hit with steeper levies, the UK's relatively balanced trade relationship with the US makes this move contentious.

There is little indication that Washington is willing to reconsider this tariff. According to US officials, the 10% rate is a non-negotiable baseline—a hard line meant to avoid setting a precedent that might undermine the tariff regime as a whole.

That puts the UK in a difficult position. Despite the absence of a trade deficit, British goods are facing the same tariff levels as those from surplus-running countries. More concerning for UK industry, British-made cars face a 25% tariff, while Chinese electronics receive exemptions—an imbalance that has drawn quiet frustration in Westminster.

A Wider Web of Negotiations

Complicating the picture further is the UK’s parallel trade reset with the European Union. London and Brussels are in early talks to remove friction in food and farm exports, aiming to align export rules more closely as part of a “reset” agreement. Washington has historically taken a strong interest in UK-EU trade alignments, wary of any arrangements that might constrain future US-UK deals.

The United States may seek to weigh in on UK-EU negotiations, especially in areas like digital regulation and product standards. There is also growing pressure from Washington for allied nations to join efforts to counter Chinese economic influence, possibly including restrictions on re-routed Chinese goods entering the US via third countries like the UK.

Such demands could conflict with Britain’s strategic positioning as a globally connected economy—a key post-Brexit selling point aimed at fostering strong ties with both Western allies and East Asia.

Leverage in a Shifting Landscape

Amid recent turmoil in global financial markets, including instability in the US bond market, some analysts believe that Washington may now need this deal more than it did just weeks ago.

“The UK has more leverage than it did a month ago,” one Whitehall official noted. “The US needs easy wins with allies. And we’re one of them.”

While Prime Minister Starmer is unlikely to exploit that leverage publicly, the dynamics suggest that Britain may have more negotiating power than previously thought.

As discussions progress, one thing remains clear: this will not be a traditional trade deal, but rather a strategic, sector-specific arrangement—and even that will depend on whether both sides can reconcile tariff policies with their broader geopolitical ambitions.