The US and UK have agreed the terms for a trade deal, Sky News understands.

A government source has told Sky’s deputy political editor Sam Coates that initial reports about the agreement in The New York Times are correct.

Coates says he understands a “heads of terms” agreement, essentially a preliminary arrangement, has been agreed which is a “substantive” step towards a full deal.

Three sources familiar with the reported plans had earlier told the New York Times that the US president will announce on Thursday that the UK and US will agree a trade deal.

Sir Keir Starmer has vowed to “deliver security and renewal for our country” ahead of an expected announcement on a US trade deal.

Speaking to the London defence conference, Sir Keir said: “Talks with the US have been ongoing and you’ll hear more from me about that later today.

“But make no mistake, I will always act in our national interest, for workers, businesses and families, to deliver security and renewal for our country.”

Shortly after the report emerged the value of the British pound rose by 0.4% against the US dollar.

Mr Trump had earlier teased that he would be announcing a major trade deal in the Oval Office at 10am local time (3pm UK time) on Thursday without specifying which country it had been agreed with.

Writing in a post on his Truth Social platform on Wednesday, he said the news conference announcing the deal would be held with “representatives of a big, and highly respected, country”.

He did not offer more details but said the announcement would be the “first of many”.

A White House spokesperson has declined to comment on the New York Times report.

Follow The World

Listen to The World with Richard Engel and Yalda Hakim every Wednesday

Tap to follow

Senior Trump officials have been engaging in a flurry of meetings with trading partners since the US president announced his “liberation day” tariffs on both the US’ geopolitical rivals and allies on 2 April.

Mr Trump imposed a 10% tariff on most countries including the UK during the announcement, along with higher “reciprocal” tariff rates for many trading partners.

However those reciprocal tariffs were later suspended for 90 days.

Britain was not among the countries hit with the higher reciprocal tariffs because it imports more from the US than it exports there.

However, the UK was still impacted by a 25% tariff on all cars and all steel and aluminium imports to the US.

A UK official said on Tuesday that the two countries had made good progress on a trade deal that would likely include lower tariff quotas on steel and cars.

Read more:
UK chancellor outlines red lines for US trade deal
Will MPs get a vote on a trade deal with Donald Trump?

Mr Trump said the same day that he and top administration officials would review potential trade deals with other countries over the next two weeks to decide which ones to accept.

Last week he said that he has “potential” trade deals with India, South Korea and Japan.

Asked on Sky News’ Breakfast programme about the UK-EU summit on 19 May and how Mr Starmer would balance relationships with the US and EU, Coates said: “I think it is politically helpful for Keir Starmer to have got the heads of terms, the kind of main points of a US-UK trade deal, nailed down before we see what we have negotiated with the EU — or, more importantly, Donald Trump sees what we have negotiated with the EU.”

Coates said there was “always a danger” that if it happened the other way around, Mr Trump would “take umbrage” at negotiations with the EU and “downgrade, alter or put us further back in the queue” when it came to a UK-US trade deal.

US and Chinese officials to discuss trade war

It comes as the US and China have been engaged in an escalating trade war since Mr Trump took office in January.

The Trump administration has raised tariffs on Chinese goods to 145% while Beijing has responded with levies of 125% in recent weeks.

US Treasury secretary Scott Bessent and US trade representative Jamieson Greer are set to meet their Chinese counterparts in Switzerland this week to discuss the trade war.

China has made the de-escalation of the tariffs a requirement for trade negotiations, which the meetings are supposed to help establish.

Sir Keir Starmer sent his chief cabinet “fixer” to attempt to calm down jittery Labour MPs in a mutinous mood after last week’s elections drubbing by Reform.

But instead of calming nerves, cabinet office minister Pat McFadden warned Labour were now facing “the fight of our lives” against Nigel Farage and his party.

Politics latest: Farage urged to suspend new councillor

Rebel MPs claimed Mr McFadden, who spoke to up to 100 Labour MPs in a Commons committee room for an hour, was acting as a “human shield” for the embattled prime minister.

The showdown came as the fury of Labour MPs over winter fuel payment cuts reached a crescendo, after Sir Keir emphatically rejected demands for a U-turn.

The emergency meeting of the Parliamentary Labour Party, called at just a few hours’ notice, was officially billed by the party’s high command as a briefing on their “plan for change”.

But it was also intended to head off a mutiny by Labour MPs after shock victories by Reform UK last week in county council polls, mayoral elections and the Runcorn and Helsby by-election.

No sign of a winter fuel U-turn

Some Labour MPs were privately critical of Sir Keir for not facing his backbench critics. Others stayed away, claiming the meeting was pointless because the government was not listening to their concerns.

As a result, many of the party’s most high-profile rebels on winter fuel payments, benefit cuts and other issues were absent. Veteran left-winger Diane Abbot attended but left before the end, refusing to talk to journalists.

Many of those attending were younger MPs elected last July and so the mood was not as acrimonious as the leadership might have feared. Mr McFadden was applauded at the end of the meeting.

Speaking with Treasury ministers Darren Jones and James Murray alongside him but no Rachel Reeves, who was visiting Scotland, Mr McFadden gave no hint of concessions on controversial policies.

Read more:
How Farage is flirting with Labour’s loyal voters
The choice facing Labour in face of Reform threat

‘Battle for the future’

Instead, he launched an attack on Mr Farage’s Reform, which senior cabinet ministers acknowledge is now a real threat to Labour and may become the party’s main rivals.

According to a government source present at the meeting, Mr McFadden began his speech by saying: “The big point I want to make to you is that a new fight is taking shape.

“It’s a fight between our values and a nationalist politics of the right. It’s a battle for the very future and the heart and soul of our country.”

Mr McFadden was said to have criticised Dame Andrea Jenkyns, the new mayor of Greater Lincolnshire, who in her victory speech vowed Reform would “reset Britain to its glorious past”.

‘We have to win’

“That is not our project, and it won’t be our project,” Mr McFadden said, as he said Labour was focused on the country’s “glorious future”.

He added: “Labour is always at its best when we look to the future. This is the fight of our lives, this is the generational fight in this new political era.

“I want to tell you we have to take on this new fight for the future – and we have to win.”

Mr McFadden addressed Labour MPs after Sir Keir dismayed many Labour MPs in a clash with Tory leader Kemi Badenoch at PMQs by refusing to admit he was wrong to remove winter fuel payments from millions of pensioners.

A senior Labour MP has said the government needs to take “corrective action” over planned disability benefit cuts – as Sir Keir Starmer faces a growing backbench rebellion.

Tan Dhesi, chair of the influential Commons defence committee, told the Politics Hub with Sophy Ridge the “disappointing” local election results show the government must listen and learn, particularly over welfare reforms.

The government has proposed tightening the eligibility requirements for the personal independent payment, known as PIP.

Politics latest: Farage urged to suspend new Reform councillor

A claimant must score a minimum of four points on one PIP daily living activity, such as preparing food, washing and bathing, using the toilet or reading, to receive the daily living element of the benefit.

Mr Dhesi, the MP for Slough, said “corrective action” needs to be taken but insisted if the government changed tact, it would not be a U-turn as the disability cuts were only proposals.

“A government which is in listening mode should be looking at what the electorate is saying,” he said.

“And we need to make sure that it’s our moral duty, responsibility, to look after the most vulnerable within our community, whether that’s in Slough, whether that’s elsewhere across the country.

“So, I hope that the government will be taking on board that feedback and many of us as MPs are giving that feedback in various meetings happening here in Westminster and then we need to take corrective action.”

Minister Alex Davies-Jones told the Politics Hub a Labour government “will always seek to protect the most vulnerable” and it wants to “listen to people who have got real lived experience”.

She added she has the “utmost respect for Tan, he’s a great constituency MP and he’s doing exactly what he should be doing, is representing his constituency”.

Sir Keir is facing a rebellion from Labour MPs, with about 40 in the Red Wall – Labour’s traditional heartlands in the north of England – reposting a statement on social media in which they said the leadership’s response to the local elections had “fallen on deaf ears”.

Read more:
Starmer defends winter fuel cut
The choice facing Labour in face of Reform threat

Several backbench Labour MPs also spoke out against the plans during a debate on PIP and disabled people in parliament on Wednesday.

Ian Byrne, MP for Liverpool West Derby, said he would “swim through vomit to vote against” the proposed changes and said: “This is not what the Labour Party was formed to do.”

Bell Ribeiro-Addy, the MP for Clapham and Brixton Hill, said she feared tightening PIP eligibility would cause deaths, adding: “Lest we forget that study that attributed 330,000 excess deaths in Britain between 2012 and 2019 to the last round of austerity cuts [under the Conservative government].”

Diane Abbott, the longest-serving female MP, accused the government of putting forward “contradictory arguments”.

“On the one hand, they insist they are helping the disabled by putting them back to work,” she said.

“But on the other hand, they say this cut will save £9bn. Well, you can’t do both.”

However, fellow Labour MP David Pinto-Duschinsky, said MPs cannot “ignore this issue” of health-related benefit claimant figures rising at “twice the rate of underlying health conditions”.

Responding for the government, social security minister Sir Stephen Timms said PIP claims were set to “more than double, from two million to over 4.3 million this decade”.

“It would certainly not be in the interests of people currently claiming the benefits for the government to bury its head in the sand over that rate of increase,” he added.