Jamie Spencer
President Donald Trump announced a breakthrough in the US-UK trade relationship, with the UK becoming the first realigned trading partner under his second term. The biggest winner of this deal is Boeing, which stands to gain significantly from new agreements, including a commitment from the UK to purchase $10 billion worth of Boeing planes.
The Deal and Boeing’s Gains
In a deal outlined on Thursday, Commerce Secretary Howard Lutnick revealed that the UK had agreed to buy up to $10 billion worth of Boeing aircraft. IAG, the parent company of British Airways, is set to order up to 30 Boeing jets. In return, the US agreed to lift tariffs on Rolls-Royce jet engines and other parts, and made concessions regarding auto imports, steel, and aluminum.
Market Reactions
Following the news, Boeing stock surged 3.3%, closing at its highest level since March 28, 2024. Despite the higher costs from tariffs under the new deal, analysts and investors viewed this outcome more positively compared to the situation before Trump’s second term, interpreting it as an improvement in the trade outlook.
Reality of the Deal and Market Sentiment
While both the US and UK leaders expressed satisfaction with the deal, some analysts cautioned that the arrangement did not address more contentious issues, such as opening the UK’s healthcare market to US providers or resolving the UK’s digital services tax. According to Michael Pearce, deputy chief economist at Oxford Economics, these issues remain unresolved, and the deal’s economic significance will depend on the fine details. However, the deal is expected to “nibble away” at the effective tariff rate, improving the trade dynamics over time.
Risks and Expectations
Although the deal is viewed positively by Wall Street, risks remain, especially in industries impacted by higher tariffs. The market’s optimism stems from a recognition that trade tensions have eased, even if only marginally, and that any sign of improvement is a win in the current environment.
