In his first trade tariff deal with a country after last month's chaotic imposition of tariffs on most of the globe, Donald Trump on Thursday cut a 27.5 percent tariff on UK cars to 10 percent, and eliminated tariffs on steel and aluminium.
The tariffs on British steel exports to the US will be reduced from 25 percent to zero. The two countries have also agreed to a tariff-free quota of 13,000 metric tonnes, though the UK has said that there will be no weakening of UK food standards on imports from the US. British tariffs on ethanol imports from the US will also be removed.
UK Prime Minister Keir Starmer said the reduction in car tariffs was “so important” to companies likes Jaguar Land Rover.
“ It is a significant step is the right direction. Many thousands of jobs will be protected and enhanced by this deal,” he said.
The car industry is getting its head around the small print of the US trade deal — and how it will affect the sector in the coming years.
While a reduction to 10 per cent — from 27.5 per cent — is a huge relief, it is still considerably higher than it was under President Biden. Tariffs on exports to the US then were 2.5 percent. The early signs from carmakers are positive, although of course they were hoping that tariffs would be removed altogether.
Ian Plummer, commercial director of Auto Trader, said: “Both consumers and UK car manufacturers will be breathing a sigh of relief at a deal that staves off the worst impact of damaging tariffs on one of our biggest industries, in its biggest single global market. “We’ve stepped back from the brink here and we welcome the clarity and certainty this brings,” he said.
The British media painted the US-UK tariff deal as a personal victory of Keir Starmer. Starmer's quiet diplomacy in managing relations with Donald Trump has delivered results in a way the European Union’s kneejerk response to Trump's tariffs has not. Britain now finds itself at the front of the queue for a trade deal, The Times newspaper noted.
Trump, too, can walk away with his head held high. Declaring the US-UK bond “stronger than ever before”, he can claim success in securing a deal — his top priority.
How long the jubilation lasts, however, will depend on the finer details of the bilateral agreement. Early signs are encouraging in certain sectors — tariffs have been reduced on cars, steel and some aircraft components.
Yet the blanket 10 percent tariff on British goods remains in place, and its continued impact will ultimately determine how beneficial this deal truly is.
US deals with other leading economies including India and Japan, while repeatedly mooted by administration officials, have yet to come to fruition. Scott Bessent, the Treasury secretary, claimed this week that talks were under way with 17 trading partners.
