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U.S.-UK announcement expected at 1400 GMT

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Narrow deal set to lower tariffs on steel, autos

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Deal would be first since Trump launched tariff war

(Writes through, adds new Trump posts in paragraphs 2, 4,

corporate and economist reaction in paragraph 21-23)

By Alistair Smout and Andrew MacAskill

LONDON, May 8 (Reuters) - The United States and Britain

will announce a deal to lower tariffs on some goods on Thursday,

the first such agreement since U.S. President Donald Trump

sparked a global trade war with universal levies.

In posts on Truth Social, Trump said he would hold an Oval

Office news conference at 10 a.m. EDT (1400 GMT) on Thursday

about a "full and comprehensive" trade agreement with Britain.

Prime Minister Keir Starmer, who describes the U.S. as an

indispensable ally, is due to provide an update later on

Thursday. The deal is likely to be narrow, with Britain securing

lower tariffs on cars and steel, the two sectors hardest hit.

"Because of our long time history and allegiance

together, it is a great honor to have the United Kingdom as our

FIRST announcement," Trump said. "Many other deals, which are in

serious stages of negotiation, to follow!"

The United States has been under pressure from investors to

strike deals to de-escalate its tariff war after Trump's often

chaotic policymaking upended global trade with friends and foe

alike, threatening to stoke inflation and start a recession.

Top U.S. officials have engaged in a flurry of meetings with

trading partners since the president on April 2 imposed a 10%

tariff on most countries, along with higher tariff rates for

many trading partners that were then suspended for 90 days.

The U.S. has also imposed 25% tariffs on autos, steel and

aluminium, 25% tariffs on Canada and Mexico, and 145% tariffs on

China. U.S. and Chinese officials are due to hold talks in

Switzerland on Saturday.

Starmer, who has struggled in government since he was

elected last July with his centre-left Labour Party, has struck

up a warm relationship with Trump and his government will

celebrate becoming the first country to agree a deal.

Britain's car industry exports luxury brands to the U.S.

and the 25% tariffs had hit the industry hard. Jaguar Land Rover

paused shipments of its cars to the U.S. for a month while it

considered how to mitigate the impact.

Shares in Aston Martin, which said it would split

the cost of tariffs with its customers and limit shipments to

the U.S., rose 8% on Thursday.

NARROW SCOPE

A British official had said that the scope of any agreement

was likely to be narrow, with Britain expected to secure lower

tariffs on a tranche of steel and autos exports.

In return, Britain is likely to agree to lower its own

tariffs on U.S. cars and cut a digital sales tax that affects

U.S. tech giants.

It had refused to lower its food standards, which are

closely aligned with the European Union, however Britain's

farming trade union has said that some U.S. producers do meet

British standards by not using growth hormones or antimicrobial

washes, and could be given greater market access.

Starmer's government has been walking a tightrope on trade,

seeking as an independent country after Brexit to build new ties

with the U.S., China and the EU without moving so far towards

one bloc that it angers the others.

There are also political threats on the domestic front.

Polling shows the government remains deeply unpopular after

it cut support for pensioner's energy bills and hiked taxes on

households and companies, making any move to cut taxes on

multi-national tech companies a big risk.

POLITICAL RISK

Britain's digital service tax, levied at 2% of UK revenue

for online marketplaces, search engines and social media

platforms, was introduced in 2020 in response to an outcry about

tax avoidance by big tech.

It was expected to raise about 800 million pounds ($1.1

billion) this year, with more than 90% coming from five big tech

firms, according to a 2023 report by lawmakers.

The status of the 10% "baseline" tariff imposed by Trump

on most countries including Britain, or any threatened tariffs

on the pharmaceutical industry, was unclear.

Parliament has said that Britain exported 7.2 billion

pounds ($9.6 billion) worth of medicinal and pharmaceutical

products to the U.S. in the year to September 2024, the second

largest sector behind cars.

Economists and one FTSE 100 chief executive said the

immediate impact of a tariff deal was likely to be limited for

Britain but that trade agreements in general - it struck a free

trade agreement with India earlier this week - would help to

produce growth in the long run.

"The American, Indian and other deals we can do will be

really important to the long-term economic health of the UK but

don't expect them to result in overnight euphoria," the CEO

said, speaking on the condition of anonymity.

JPMorgan economist Allan Monks said the upside would be

limited if the 10% tariff stayed in place.

"With the UK having broadly balanced goods trade with the

U.S., a reasonably good political relationship, no real threat

of retaliation from Westminster and extensive bilateral

negotiations having taken place, it is not clear where the UK

can go from here," he said.

(Additional reporting by James Davey and Paul Sandle; writing

by Kate Holton; Editing by Toby Chopra)