US-UK Trade Deal Expected Today As Trump Teases ‘Major’ Agreement

May 8, 2025

President Trump is set to announce a significant trade agreement with the UK, potentially reshaping political dynamics. Negotiations focus on tariff reductions and may introduce a framework for future discussions. The Bank of England might cut interest rates amid economic uncertainties exacerbated by US tariffs. Inflation concerns are rising, fueled by trade developments, while the luxury market's influence on finance adds a cultural twist. The ramifications of the deal could impact both nations profoundly in a post-Brexit landscape.

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INSIGHT

UK-US Trade Deal Outlook

A UK-US trade deal is expected to be announced, likely as a framework for further negotiations.
This deal could reduce tariffs impacting British industry like steel, cars, pharmaceuticals, and film sectors.

INSIGHT

Political Risks of Trade Deal

A US-UK trade deal has political risks, like fears over food standards and healthcare access.
Opposition resistance is anticipated, given past fiercely contested trade deals in the UK.

INSIGHT

UK Fiscal Challenges Ahead

The UK Chancellor is forecasted to miss fiscal targets by tens of billions.
This fiscal gap forces the government to consider raising taxes or cutting spending.

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On today's podcast:

(1) President Donald Trump is expected to announce a trade agreement with the United Kingdom at a news conference Thursday morning in Washington, according to people familiar with the matter.

(2) Details of An agreement are not immediately clear, but it is likely to be a framework deal that will serve as a starting point for further negotiations. The UK and US have been in intensive discussions about an economic agreement that would reduce the impact of some tariffs, with a team of British officials in Washington to negotiate terms this week, people familiar with the matter said.

(3) Chancellor of the Exchequer Rachel Reeves is on track to miss both her fiscal rules by tens of billions of pounds in the UK’s autumn budget, according to a prominent economic think tank, leaving her no option but to raise taxes or cut spending.

(4) The Bank of England is expected to cut interest rates by a quarter percentage point Thursday and may signal that another move is likely in June, potentially putting the central bank on course for its first back-to-back reductions since 2009 as the US trade war darkens the outlook for growth.

(5) Federal Reserve Chair Jerome Powell said officials are not in a hurry to adjust interest rates, adding tariffs could lead to higher inflation and unemployment.
“If the large increases in tariffs that have been announced are sustained, they’re likely to generate a rise in inflation, a slowdown in economic growth and an increase in unemployment,” Powell said Wednesday at the conclusion of a two-day meeting in Washington.

(6) The Trump administration plans to rescind Biden-era AI chip curbs as part of a broader effort to revise semiconductor trade restrictions that have drawn strong opposition from major tech companies and foreign governments, according to people familiar with the matter.

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