This week, UK Prime Minister Sir Kier Starmer and US President Donald Trump met to discuss the lowering of tariffs on goods imported to the US. In April, Trump instituted sweeping tariffs as part of his “Liberation Day” celebrations.
In addition to a blanket 10% tariff on all US imports — a move which Trump said will revitalise US manufacturing and reset America’s trade agenda — many specific countries and industries also incurred additional levies. This included higher tariffs affecting the US’ automotive and steel imports — moves which were expected to severely afflict UK manufacturing.
Now, following a meeting at 10, Downing Street, Starmer and Trump have this week come to an agreement that alleviates some, but not all, of the US’ imposed levies. The move, hailed by the Labour government as a successful effort to save “thousands of jobs” comes just days after the announcement of a new free-trade deal between the UK and India.
Relief for UK manufacturers
As a result of the negotiated deal, car export tariffs will reduce from 27.5% to 10% — a change the government says will save “hundreds of millions a year for Jaguar Land Rover alone.” Above a quota of 100,000 UK cars — slightly less than the UK exported last year — the tariff rates rise again to 27.5%. Sir Kier Starmer called the deal “a huge and important reduction.”
Cars are the UK’s biggest export to the US, selling roughly £9 billion per year. It’s also not clear if the UK will lift or alter the 10% levy the country currently charges on US car imports.
The UK’s steel supply chain is also seeing tariff reductions. The industry was, according to the government, “on the brink of collapse just weeks ago,” and will now no longer face tariffs thanks to the new deal. The UK negotiated the 25% tariff down to zero, meaning UK steelmakers can carry on exporting to the US as before. The move follows the UK government’s move to temporarily renationalise Chinese-owned British Steel last month.
Starmer and Trump also agreed on new reciprocal market access on beef – with UK farmers given a quota for 13,000 metric tonnes. The government was quick to assure citizens that the deal will result in no weakening of UK food standards on imports. The deal also saw the removal of the UK’s tariff on ethanol from the US, down to zero.
- Risk & Resilience