After the UK and the US struck a trade deal this week – the first to be reached under US President Donald Trump's administration – wealth managers discuss the impact on the economy and asset allocation.

Joaquin Thul, economist at Zurich-headquartered EFG Asset Management, hailed this week's trade agreement between the UK and the US as welcome news, coming at a time of uncertainty over trade and its potential impact on economic activity.

“The announcement from US President Donald Trump is not entirely a “full and comprehensive” announcement of a trade agreement as the American President claims, but a statement of intent to work toward improving trade between both economies,” Thul said in a note.

Although final details are still to be released, the deal is expected to include a reduction in tariffs for UK cars imported into the US. UK automobiles represented 27 per cent of the total UK goods exported to the US in 2024.

The agreement will also include a cut in tariffs for UK steel and aluminum products entering the US and an abolition or reduction of the 2 per cent digital sales tax imposed on large US companies. Preferential access of US beef, ethanol and agricultural products into the UK is also expected to be included in the deal. Pharmaceutical products will remain excluded from tariffs, as they were prior to April 2.

However, the National Farmers' Union of England and Wales has already raised concerns about the agreement. Thomas Moore, senior investment director at investment house Aberdeen, highlighted that specific UK sectors such as automotive and aerospace are the clear early beneficiaries.

The announcement was welcomed in principle by Bank of England (BoE) Governor Andrew Bailey, following the comments from the BoE that trade uncertainty could hurt UK economic growth and drive inflation higher.

“Overall, news of trade agreements between [the] UK and US are welcome in the global context of trade uncertainty,” Thul continued. “The statement of intent to reduce trade barriers will be taken positively by the corporate sector and the British government, which has been keen to boost GDP growth. However, the impact of this on activity is expected to be limited in the short term.”

Thul also emphasized that the trade deal is expected to open few possibilities of new trade between the US and UK, signifying that trade between both economies was already quite fluent before Trump’s Liberation Day announcements. 

“Looking more broadly at the implications of the deal, investors should be reassured that the US is signaling its willingness to hammer out more trade deals. Any thawing in US/China relations would be warmly received by markets. As more deals are signed, this sets up a positive outlook for equity markets as the wall of worry is climbed,” Moore said.