President Donald Trump and Prime Minister Sir Keir Starmer have announced a significant US/UK trade deal, marking the first major bilateral deal since the President’s ‘Liberation Day’ tariff announcement last month. This agreement aims to mitigate the impact of recent US tariff hikes and strengthen economic ties between the two nations.
The agreement is seen as a strategic move to counteract potential economic fallout from the US’s broader tariff policies. By securing favourable terms for key industries, the UK aims to protect jobs and maintain export competitiveness.
Key details
The deal introduces notable tariff reductions and market access enhancements:
- Metals: Tariffs on U.K. steel and aluminium exports to the US will be eliminated, providing relief to British metal industries.
- Automotive: The US will reduce tariffs on British-made cars from 27.5% to 10% for up to 100,000 vehicles annually.
- Agriculture: Both countries agreed to a reciprocal, tariff-free quota of 13,000 metric tonnes of beef. Additionally, the UK will remove its 19% tariff on U.S. ethanol, facilitating up to $700m in US exports.
- Aerospace: US duties on British aeroplane parts, including components from Rolls-Royce, will be removed, enhancing collaboration in the aerospace sector.
The Prime Minister, speaking to workers at the Jaguar Land Rover plant in Solihull, described it as a fantastic day and that the agreement would save jobs in the car and steel industries that had been under threat.
However, despite these advancements, the deal retains the ten per cent baseline tariff on UK exports to the US and some critics of the deal have stated that it has failed to address many of the high tariffs that remain in place between the two countries.
Andrei Danescu, CEO of robotics firm Dexory said: “The US/UK trade deal is a welcome headline – with tariff relief for vital exports and progress on digital services taxes, it’s a step forward for transatlantic trade. But sadly, headlines don’t build resilience! Even positive shifts in trade policy can create ripple effects across supply chains. For leaders in logistics and operations, this is yet another reminder that resilience and agility isn’t optional – it’s the foundation for long-term competitiveness in an increasingly unpredictable world and tougher market.
“Years of just-in-time logic in logistics, geographic concentration and fragile sourcing strategies have left entire industries exposed. Each new shift – whether it’s a tariff, a pandemic, or a trade deal – reveals the same truth: too many operations are built for the moment, not for the long haul.
“What’s needed now is not a patch, but a full rethinking of how supply chains are designed, with flexibility, diversification and resilience baked in from the foundation. I believe the real test for business leaders isn’t how quickly they can reshuffle in response to the latest changes, it’s whether they’ve built an operation that won’t need to react to every headline.”
There was a more positive response from the automotive, metals and food and beverage sectors. Mike Hawes, SMMT Chief Executive, said: “The agreement announced to reduce tariffs on UK car exports into the US is great news for the industry and consumers. The application of these tariffs was a severe and immediate threat to UK automotive exporters so this deal will provide much needed relief, allowing both the industry, and those that work in it, to approach the future more positively.
“Government has recognised the importance of the automotive industry to UK exports and the wider economy and has worked quickly and tirelessly with US counterparts to strike an agreement. We hope that it will lead to broader and deeper cooperation that reduces barriers to trade still further, charting a path to economic growth for both nations.”
Karen Betts, Chief Executive, The Food and Drink Federation (FDF), said: “This is very positive news for the UK economy, and to be welcomed. There is obviously still the question of the ten per cent tariff that continues to apply to food and drink exports. We hope that this deal creates the space and momentum for continued discussions about removing those tariffs too.
“The US is UK food and drink’s third biggest export market, with £2.7bn worth of goods exported there in 2024, many of which are produced by small and medium sized businesses. Government can make a real difference here by providing greater practical guidance and support to help more food and drink businesses find new customers abroad.”
Steve Morley, President of the Confederation of British Metalforming (CBM) added: “The Confederation of British Metalforming (CBM) welcomes the new US-UK trade agreement as a significant step forward for UK manufacturers, particularly those operating in the automotive, aerospace, steel and aluminium sectors.
“This deal provides much needed clarity and improved access to a critical market for CBM members, many of whom are world-class suppliers into transatlantic automotive and industrial supply chains.
“We remain committed to supporting our members as they take advantage of this agreement and urge continued cooperation between both governments to ensure regulatory alignment and simplified customs procedures that have been mentioned all progress smoothly and at pace.
“This is a positive signal for manufacturing at a time when confidence and international competitiveness are being tested by a wave of geopolitical pressures.”
Gerhard Trilling, General Manager of Bridgnorth Aluminium, the only aluminium rolling mill producing coils and sheets in the UK, said: “We have been one of the loudest voices championing the need to secure a trade deal with the US, so we naturally welcomed the news of a 0% tariff agreement on aluminium.
“This is a significant achievement for our government, but more importantly for UK manufacturing and our ability to compete globally. For BAL, this will give us much-needed certainty and will allow us to accelerate our investment in new technology at our Bridgnorth facility, driving our desire to be a sustainable manufacturer and a key player in the circular economy.
“This agreement will unlock new market opportunities, attract increased investment and accelerate innovation throughout the supply chain. It will also undoubtedly safeguard high value jobs and, crucially, will give us the platform to create new employment locally with a strong determination to grow the aluminium specialists of the future.
“We commend the Prime Minister and the team at the Department for Business and Trade for their leadership and foresight in delivering this result, and we look forward to continued collaboration with a strategic trading partner that will help shape a strong and sustainable industrial future for the UK.”
Chris Barlow, Head of Manufacturing at MHA, commented: “The removal of tariffs from steel and aluminium is excellent news for manufacturers and gives a greater amount of certainty to the sector. Given that the government estimates around five per cent of UK steel exports and six per cent of aluminium exports by volume go to the US, this deal secures supply chains and exports into the US. It also avoids the market being flooded with cheap steel.
“However, the devil is in the detail, and several questions still remain around whether this deal will be ratified and changed. And most importantly, whether it will potentially have a detrimental effect on the UK’s trade deal with Europe.”
Richard Torbett, Chief Executive of the Association of the British Pharmaceutical Industry (ABPI) said: “We thank the government for its continued efforts that have led to this essential first-step agreement with the US.
“Although this initial deal is only a first step for pharmaceutical products, we remain convinced that reaching a favourable outcome remains possible and in the interests of both countries. Free trade between the UK and the US is critical to supply chain resilience, ensuring patients in both countries have access to the medicines and vaccines they need. US tariffs on UK pharmaceuticals run counter to that goal and should be avoided.
“The UK and US are leading partners in life science innovation with deeply interconnected research networks and supply chains that work for both countries. We will work with UK and US officials to support them in reaching an agreement which allows our sector to flourish in both countries.”
“We will also continue our discussions with the UK government to ensure Britain’s life science sector can return to international competitiveness to enhance UK attractiveness as a destination for inward investment.”