US and UK Announce Preliminary Agreement to Reduce Tariffs on British Cars and Metals, Aiding Key Industries

The U.S. and U.K. have reached a preliminary agreement to reduce tariffs on British cars, steel, and aluminum, announced by President Donald Trump and Prime Minister Keir Starmer. The deal includes reducing auto tariffs from 27.5% to 10% for up to 100,000 vehicles annually and eliminating 25% tariffs on steel and aluminum, with a 13,000-metric-ton quota for tariff-free steel. While hailed as historic, no formal agreement is signed, and details remain under negotiation. The agreement aims to benefit key U.K. industries and protect jobs but stops short of a comprehensive trade pact.

Tariff Reductions on British Cars and Metals

Under the terms of the agreement, the U.S. will reduce tariffs on up to 100,000 British-made vehicles annually from 27.5% to 10%. This change is particularly significant for luxury carmakers such as Jaguar Land Rover, Rolls-Royce, and Aston Martin, which had previously paused exports to the U.S. following the imposition of higher tariffs in April. The 100,000-vehicle cap closely matches the volume of UK car exports to the U.S. in 2024, providing immediate relief but potentially limiting future growth.

In addition to the automotive sector, the U.S. has agreed to eliminate the 25% tariffs on UK steel and aluminum imports. These duties, introduced under Section 232 of the U.S. Trade Expansion Act, had been a major point of contention between the two allies. The UK government confirmed that the new arrangement includes a 13,000-metric-ton quota for tariff-free steel exports to the U.S.

Commerce Secretary Howard Lutnick stated that the U.S. would also negotiate a new "trading union" with the UK to harmonize supply chains in the steel and aluminum sectors. The White House acknowledged the UK's recent actions to address global overcapacity, including its intervention in the Chinese-owned British Steel, as a factor in the decision to ease tariffs.

Agricultural and Food Trade Provisions

The agreement also includes provisions for reciprocal market access in the beef sector. UK farmers will be allowed to export up to 13,000 metric tonnes of beef to the U.S., while American producers will gain expanded access to the UK market. The U.S. Department of Agriculture estimates the deal could generate $5 billion in export opportunities, including $700 million in ethanol and $250 million in other agricultural products.

The UK has agreed to eliminate tariffs on U.S.-sourced ethanol, a move welcomed by American biofuel producers. However, UK officials emphasized that there would be no weakening of domestic food safety standards, amid concerns raised in Parliament about hormone-treated beef and other controversial practices in U.S. agriculture.

Industry and Political Reactions

The announcement was met with cautious optimism from industry leaders. Jaguar Land Rover CEO Adrian Mardell said the deal "secures greater certainty for our sector and the communities it supports," noting that the automotive industry sustains 250,000 jobs in the UK. Steve Rigby, CEO of the Rigby Group, described the agreement as a timely intervention that "moves us out of the red zone" for the West Midlands economy.

UK Steel Director General Gareth Stace called the agreement a "major relief" for the steel sector, crediting the UK government's "cool-headed approach" in negotiations. However, Duncan Edwards, CEO of BritishAmerican Business, expressed reservations, saying, "It's better than yesterday but it's definitely not better than five weeks ago."

In Parliament, Trade Minister Douglas Alexander described the deal as "jobs saved, not job done," while Conservative Shadow Trade Secretary Andrew Griffith dismissed it as a "Diet Coke deal, not the real thing."

Ongoing Negotiations and Unresolved Issues

Despite the public fanfare, no formal agreement has been signed. President Trump acknowledged that the "final details are being written up" and are expected to be finalized in the coming weeks. The White House has framed the deal as the first in a series of international trade agreements currently under negotiation.

Several key issues remain unresolved. The U.S. has maintained a 10% baseline tariff on most UK goods, a policy introduced in April as part of a broader protectionist strategy. Additionally, a 25% tariff on certain automotive parts remains in effect, and discussions on pharmaceutical tariffs are ongoing. Trump has repeatedly stated his intention to impose duties on imported medicines to bolster domestic manufacturing.

The UK has indicated that it may reduce its own 10% tariff on U.S. vehicle imports, but this has not yet been confirmed. Meanwhile, the U.S. has promised to fast-track American goods through UK customs, reducing bureaucratic delays for exporters.

Strategic and Diplomatic Significance

Prime Minister Starmer, speaking from a Jaguar Land Rover factory in the West Midlands, described the agreement as a "fantastic, historic day" and emphasized the importance of deepening the transatlantic partnership. "We are the first country to secure such a deal with the United States," he said.

President Trump, speaking from the White House, called it a "great deal" and pushed back against criticism that he was overstating its importance. "This is a maxed out deal that we're going to make bigger," he said.

The agreement marks the first trade breakthrough between the U.S. and UK since Trump returned to office and comes after years of stalled negotiations. While it does not represent a full free trade agreement, it signals a renewed willingness on both sides to engage in economic cooperation.

US and UK Announce Preliminary Agreement to Reduce Tariffs on British Cars and Metals, Aiding Key Industries

Key Updates

UK Government Reassures Public: Hormone-Treated US Beef Banned Despite New Trade Deal

US Lifts 25% Tariffs on UK Steel and Aluminium: Trade Deal Eases Pressure on Struggling Industry

Japan Seeks Concessions on US Auto Tariffs Amid New US-UK Trade Agreement

U.S. Commerce Secretary Howard Lutnick: Trade Deals with South Korea and Japan to Face Delays Compared to UK Agreement

Bank of England Governor Andrew Bailey Urges UK to Rebuild EU Trade Ties Amid New US Tariff Deal

EU Approves €5 Billion French Plan to Boost Wine and Spirits Exports to US Amid Tariff Tensions