UK agrees trade deal with US but 10% tariff remains

The UK and the US have reached a “first-of-a-kind” trade agreement, under which the US will slash tariffs on UK carmakers, steelworks and farmers – protecting jobs and providing stability for exporters.

According to the trade deal, car export tariffs will reduce from 27.5% to 10% – saving hundreds of millions a year for Jaguar Land Rover alone. This will apply to a quota of 100,000 UK cars, almost the total the UK exported last year.

Additionally, prime minister Keir Starmer negotiated the 25% tariff down to zero for the steel and aluminium industry.

However, a 10% tariff remains on all other goods, as confirmed on Liberation Day.

Furthermore, in a win for both nations, the UK has agreed new reciprocal market access on beef – with UK farmers given a quota for 13,000 metric tonnes.

As part of the deal, Starmer also confirmed that there will be “no weakening” of UK food standards on imports.

The UK will also remove the tariff on ethanol – which is widely used in our manufacturing sector – coming into the UK from the US, down to zero.

As the world’s two largest exporters of services, Starmer stated that both nations are working to reduce trade barriers in the sector, supporting employment in major UK cities including Leeds, Manchester, London and Birmingham.

The news comes after the UK signed a free trade deal with India which will add £4.8bn to the UK economy and £2.2bn in wages every year.

The UK has also become the first country to reach a trade agreement with the US since president Donald Trump announced his Liberation Day tariffs on 2 April.

Starmer said: “This historic deal delivers for British business and British workers protecting thousands of British jobs in key sectors including car manufacturing and steel. My government has put Britain at the front of the queue because we want to work constructively with allies for mutual benefit rather than turning our back on the world.

“As VE Day reminds us, the UK has no greater ally than the United States, so I am delighted that eight decades on, under President Trump the special relationship remains a force for economic and national security. This is jobs saved, jobs won but not job done and our teams will continue to work to build on this agreement. My government is determined to go further and faster to strengthen the UK’s economy, putting more money in working people’s pockets as part of our Plan for Change.”

Rain Newton-Smith, CBI CEO, added: “This week, the UK Government should be commended for securing a trade deal with India and now the US. A clear message is being sent to the international community: the UK is a fierce advocate of free and fair trade and a reliable partner with whom to do business.

“As one of our largest trading partners, a strong relationship with the US will always be welcomed by business to bolster our mutual competitiveness and kickstart growth. Today’s agreement must pave the way for deeper cooperation, making both of our economies prosper and grow. As the dust settles, we need to understand the impacts and work with our allies to extend its reach. The government must also work with business to spell out exactly how it can make the most of the opportunities this deal creates.”