President Trump and UK PM Starmer Announce Landmark Trade Deal: US Reduces Tariffs on UK Cars; Over 5 Million US Student Loan Borrowers Face Consequences

On May 8, 2025, President Donald Trump and UK Prime Minister Keir Starmer announced a trade agreement reducing U.S. tariffs on the first 100,000 UK vehicles from 27.5% to 10% and eliminating tariffs on UK steel and aluminum. The UK will lower tariffs on U.S. goods and purchase $10 billion in Boeing aircraft. Concurrently, the U.S. Department of Education resumed collections on defaulted student loans, affecting 5.3 million borrowers, with potential wage garnishment and loss of federal benefits following a five-year pause.

A Historic Trade Pact on Victory Day

Announced on the 80th anniversary of Victory Day, the U.S.-UK trade agreement marks a pivotal moment in transatlantic economic relations. President Trump described the deal as “a great deal for America,” emphasizing its benefits for U.S. exporters, particularly in agriculture and manufacturing. Prime Minister Starmer echoed the sentiment, calling it a “boost for trade” that would protect and create jobs in both countries.

The agreement is the first to emerge from Trump’s broader tariff overhaul, which began with sweeping “reciprocal” tariffs imposed in April 2025. While the UK was initially exempt from the harshest of these measures, it still faced a 10% universal tariff and 25% duties on autos, steel, and aluminum. The new deal revises those terms.

Key Provisions of the U.S.-UK Trade Deal

Under the terms of the agreement:

• The U.S. will reduce tariffs on the first 100,000 UK vehicles imported annually from 27.5% to 10%. Any vehicles beyond that quota will remain subject to the 25% tariff.
• Tariffs on UK steel and aluminum will be eliminated entirely.
• The UK will lower its average tariff on U.S. goods from 5.1% to 1.8%, affecting over 2,500 products including olive oil, wine, and sports equipment.
• The UK has agreed to purchase $10 billion worth of Boeing aircraft.
• The deal includes a new trading union for steel and aluminum and secures supply chains for aerospace and pharmaceutical products.
• The UK will reduce or eliminate non-tariff barriers that previously restricted U.S. exports, and will fast-track American goods through customs.

Commerce Secretary Howard Lutnick confirmed that the 10% baseline tariff will remain in place for other countries, signaling that the UK’s terms are not a template for future deals. Trump emphasized that other nations would face higher tariffs unless they negotiated similar reciprocal agreements.

Agricultural and Industrial Gains for the U.S.

The White House stated that the deal opens a $5 billion opportunity for new U.S. exports, particularly in agriculture. American beef and ethanol producers are expected to benefit from expanded access to UK markets. The agreement also includes a tariff-free quota for 13,000 metric tons of U.S. beef.

President Trump highlighted the deal’s strategic importance, stating it “enhances market access for American exporters and lowers tariff and non-tariff barriers to protect our economic and national security.” The U.S. and UK had an estimated $148 billion in total goods trade in 2024, making the UK one of America’s key trading partners.

Student Loan Collections Resume After Five-Year Pause

While the trade deal dominated headlines, millions of Americans are bracing for the resumption of federal student loan collections. On May 5, the Department of Education began issuing 30-day notices to 5.3 million borrowers in default, warning them of potential loss of federal benefits, including tax refunds and Social Security payments.

This marks the first time in five years that the federal government is resuming collections on defaulted student loans. The moratorium, which began in March 2020 during the COVID-19 pandemic, was officially ended by Congress in June 2023. Although the Biden administration had introduced the Saving on a Valuable Education (SAVE) repayment plan to ease the transition, the plan was blocked by a federal appeals court in August 2024, leaving many borrowers without a clear path forward.

According to the Department of Education, a borrower is considered in default if no payment has been made in 270 days. In addition to the 5.3 million already in default, another 4 million borrowers are in late-stage delinquency, having missed payments for more than 90 days and are at risk of defaulting soon.

Consequences for Borrowers

Borrowers who fail to respond to the 30-day notice may face involuntary collection actions, including:

• Wage garnishment, where a portion of a borrower’s paycheck is automatically deducted to repay the loan.
• Withholding of federal benefits, such as tax refunds and Social Security payments.
• Negative credit reporting, which can impact future borrowing and employment opportunities.

Education Secretary Linda McMahon stated, “Going forward, the Department of Education, in conjunction with the Department of Treasury, will shepherd the student loan program responsibly and according to the law, which means helping borrowers return to repayment — both for the sake of their own financial health and our nation’s economic outlook.”

Rob Moore, financial aid director at Missouri State University, noted that the resumption of collections will be “very challenging” for many borrowers. “A lot of these folks went for five years without making any payments on their student loans and there were questions about whether they would ever need to,” Moore told USA TODAY.

Policy Shifts and Legal Uncertainty

The Trump administration has also announced changes to the Public Service Loan Forgiveness (PSLF) program, disqualifying workers at nonprofit organizations deemed to have engaged in “improper” activities. This move adds another layer of complexity for borrowers seeking relief through public service.

The legal and administrative landscape for student loan repayment remains unsettled. The SAVE plan, which promised lower monthly payments and faster forgiveness, remains blocked. Meanwhile, the Department of Education is proceeding with collections under existing statutory authority.

References

• Fact Sheet: U.S.-UK Reach Historic Trade Deal
• Trump Announcing ‘Major’ Trade Deal With U.K. Today (Live Updates)
• US-UK trade deal: How are Trump’s global tariff talks shaping up?
• WATCH: Trump announces trade deal with UK, cutting tariffs on autos, steel and aluminum
• Trump lowers tariffs on James Bond's cars but spectre remains on foreign films
• Borrowers in Default on Federal Student Loans Face Imminent Collection Efforts - Henssler Financial
• Benefits could be withheld from 5.3 million defaulted student loan borrowers, feds say
• Trump resumes collecting student loan defaults for first time in 5 years. What options do you have?