By Brian Swint and George Glover

Investors see the U.K. trade deal as promising start to bigger relief on tariffs. They may be getting ahead of themselves.

President Donald Trump said that he will today unveil a "a full and comprehensive" arrangement with the U.K. that will be the "first of many."

The hope is that this is the start of a streak of bilateral agreements that will substantially bring down overall tariff levels before Trump's "Liberation Day" taxes take effect July 8. But there are good reasons why the U.K. deal was the quickest and easiest to complete, and it doesn't necessarily guide the way for others.

For one, the stakes are relatively low. Trump views trade deficits as damaging to the U.S., but America actually ran a surplus with Britain in the fourth quarter. To be sure, that was the first time that had happened since 2011, excluding the volatile quarters of the Covid-19 pandemic, but it shows that the U.K. sells only about as much to the U.S. as it buys.

If Trump wants to get trade deficits down, a deal with the the U.K. won't make a big dent.

Beyond that, the U.K. is only the fifth-biggest buyer of U.S. exports, behind Canada, Mexico, China, and Japan. And that doesn't account for the European Union, which represents 20 countries including Germany and France and which will be negotiating as a bloc.

Second, the U.K. has some low-hanging fruit to offer as concessions. Besides easing restrictions on food and agricultural imports from the U.S., Britain also imposes a 2% tax on revenues of search engines, social media, and online markets that make money from U.K. users. That hits Big Tech firms like Amazon, Meta Platforms, and Google parent Alphabet.

The details of the U.K. deal have yet to be announced, but it isn't obvious what other countries with trade surpluses with the U.S., such as China, India, and Vietnam, can put on the table.

To be sure, Thursday's news is good news, especially for the British car, aerospace and pharmaceutical companies that export a lot to the U.S., such as Rolls-Royce, BAE Systems, and AstraZeneca. Spirits maker Diageo, the owner of Johnnie Walker whiskey and Tanqueray gin, must also be breathing a sigh of relief.

It's also a sign that deals are possible. But the real relief won't come until the Trump administration reaches agreements with even bigger trade partners.

Maersk Cuts Container Market Outlook

A.P. Moeller-Maersk stood by its full-year earnings guidance Thursday, but warned that trade tensions could hit global container market volumes.

The Danish shipping giant still expects earnings before interest, taxes, depreciation and amortization of between $6 billion and $9 billion in 2025, but is now forecasting global container volume growth of between a 1% fall and a 4% rise. It had previously expected an expansion of 4%.

"With trade tensions flaring up and uncertainty on the rise, global supply chains are once again in the spotlight," CEO Vincent Clerc said.

The company's results are typically seen as a bellwether for global trade, so its gloomy forecast on volumes will do nothing to ease fears that ongoing tensions between the U.S. and China will weigh on demand. Maersk shares slid 1.4% in early trading.

Toyota Warns Tariffs Will Dent Profit

Toyota said that its annual profit will plunge on Thursday, warning that U.S. tariffs could dent its bottom line.

The Japanese car maker's quarterly earnings topped analysts' forecasts, but it now expects its profit for the current fiscal year to tumble 35% to 3.1 trillion yen ($21.4 billion). It said the impact of Trump's levies in April and May had "been tentatively factored in" to its forecast for now. Toyota's American depositary receipts dropped 2.2% in early trading.

Tariffs Keep Fed on Hold

Wednesday's press conference following the Federal Reserve interest-rate decision confirmed that tariffs are the greatest unknown for policymakers. Chair Jerome Powell and colleagues kept rates on hold and said they're waiting before making the next move.

For now, the economy is strong enough to give the Fed time. Markets are pricing in an 80% chance for another decision for unchanged rates in June and a 55% chance of a quarter-point cut in July.

Write to Brian Swint at brian.swint@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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May 08, 2025 09:07 ET (13:07 GMT)

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