On Thursday, the United Kingdom and the United States reached a significant trade agreement, but the deal is not entirely free from tariffs. This agreement represents the first trade deal the United States has made since President Donald Trump introduced his "reciprocal tariffs" policy last month, which targets various countries worldwide. The United Kingdom found itself at the forefront of negotiations with the U.S., partially due to its status as one of the few countries where the U.S. maintains a trade surplus in goods. This means that the U.S. exports more to the U.K. than it imports, creating a favorable position for the U.K. in discussions with the Trump administration. Despite their "special relationship," the U.K. was unable to convince President Trump to eliminate all tariffs during these trade talks. The terms of the agreement allow the U.K. to export up to 100,000 vehicles annually to the U.S. at a reduced tariff rate of 10%. Any vehicles exceeding this quota will incur a higher duty of 25%. Additionally, British steelmakers and the aluminum industry will benefit from tariff-free exports, a reduction from the 25% tariff imposed by the U.S. in February. However, other goods imported from the U.K. to the U.S. will continue to face a baseline tariff of 10%. President Trump has indicated that this is the lowest country-specific tariff that will be applied to any U.S. trading partners. Trump suggested that such deals could be rare and emphasized the unique nature of the U.S.-U.K. trade relationship, which is balanced and supported by close political ties. He hinted that under his administration, it is unlikely that any country will be completely free from tariffs. When asked if the 10% baseline tariff would serve as a model for future trade agreements, Trump stated, "That's a low number," adding that countries with larger trade surpluses would face much higher tariffs. Analysts interpret this to mean that a 10% tariff is the best rate other countries and trading groups could hope to achieve. Jan Hatzius, chief economist and head of global investment research at Goldman Sachs, noted that the U.S.-U.K. deal implies the 10% baseline tariff will likely remain for other trade partners, but there is more flexibility than anticipated regarding sector-specific tariffs. JPMorgan's U.S. Economist Abiel Reinhart noted in a client memo that maintaining a minimum tariff rate of 10% on most goods from most countries seems likely this year. Reinhart also highlighted that the U.K.'s ability to secure specific concessions for its automotive, steel, and aluminum industries suggests that the U.S. might be open to negotiating tailored deals with other nations, albeit with a narrower scope. Reinhart pointed out that this issue has been a significant point of contention in trade talks with Japan, given the importance of its automotive sector. However, he suggested that the U.S. might have been more amenable to concessions with the U.K. regarding autos since the U.K. accounts for only about 2.5% of U.S. vehicle and parts imports, whereas Japan represents close to 12%. Rella Suskin, an equity analyst and automotive expert at Morningstar, observed that the agreement to reduce tariffs on only 100,000 cars effectively limits the market share of many major British automakers, such as Tata Motors-owned Jaguar Land Rover. Instead, the deal is likely to benefit automakers like BMW, which imports some auto parts tariff-free and assembles vehicles in the U.S. Suskin remarked that the U.K.'s ability to export 100,000 vehicles annually at a 10% tariff does not provide Jaguar with a competitive advantage against European automakers. Andrew Hood, head of international trade at the European law firm Fieldfisher and a former advisor to British Prime Minister David Cameron, commented that the agreement is more focused on strengthening the broader U.K.-U.S. relationship rather than facilitating trade between the two countries. Hood noted that the deal is considerably more limited than most Free Trade Agreements, concentrating on supporting specific sectors like the automotive industry, ethanol producers, and steel and aluminum manufacturers, where tariffs have been significantly reduced or eliminated. While the remaining 10% tariffs may adversely affect the U.K., others argue that the deal could also impact U.S. economic growth. Michael Pearce, deputy chief U.S. economist at Oxford Economics, suggested that although exemptions might slightly reduce the effective tariff rate