On Thursday, President Donald Trump and Prime Minister Keir Starmer announced a “historic” U.S.-U.K. trade deal, marking the first agreement since Trump launched a global tariff policy on April 2.
Commenting on the agreement, Trump said, “The deal includes billions of dollars of increased market access for American exports, especially in agriculture, dramatically increasing access for American beef, ethanol and virtually all of the products produced by our great farmers.”
“This is a great deal for America,” said the White House in a statement. But what does this trade deal include?
Liberation Day tariff remains in effect
The reciprocal tariff rate of 10 percent, as originally announced on Liberation Day, will remain in effect. However, the U.S.-U.K. trade deal will significantly expand U.S. market access in the U.K., creating a $5 billion opportunity for new exports for U.S. farmers, ranchers and producers. This includes more than $700 million in ethanol exports and $250 million in other agricultural products, like beef.
It commits the countries to work together to enhance industrial and agricultural market access. The deal also closes loopholes and increases U.S. firms’ competitiveness in the U.K.’s procurement market.
“It maximizes the competitiveness and secures the supply chain of U.S. aerospace manufacturers through preferential access to high-quality U.K. aerospace components,” the White House added.
British automakers get relief
The United States said it will agree to an alternative arrangement for the Section 232 tariffs on U.K. autos. Under the deal, the first 100,000 vehicles imported into the U.S. by U.K. car manufacturers each year are subject to the reciprocal rate of 10 percent. Any additional vehicles each year are subject to a 25 percent rate.
The British government explained that car export tariffs will reduce from 27.5 percent to 10 percent, saving hundreds of millions a year for Jaguar Land Rover alone. This will apply to a quota of 100,000 U.K. cars, “almost the total the U.K. exported last year.”
“The car industry is vital to the U.K.’s economic prosperity, sustaining 250,000 jobs. We warmly welcome this deal, which secures greater certainty for our sector and the communities it supports,” stated Adrian Mardell, CEO of JLR.
Steel and aluminum
The United States also recognizes the economic security measures taken by the U.K. to combat global steel excess capacity and will negotiate an alternative arrangement to the Section 232 tariffs on steel and aluminum.
The United States agreed to eliminate its recently imposed levies of 25 percent on U.K.-made steel and aluminum, according to the British government. The new agreement “furthers shared national security interests, creating a new union for steel and aluminum,” the U.S. Commerce Department said.
“The U.K. steel industry – which was on the brink of collapse just weeks ago – will no longer face tariffs thanks to today’s deal. The Prime Minister negotiated the 25 percent tariff down to zero, meaning U.K. steelmakers can carry on exporting to the U.S. This follows last month’s intervention from the Prime Minister to take control of British Steel to save thousands of jobs in Scunthorpe,” said the British government.
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What did the U.S.-U.K. trade deal exclude?
Pharmaceutical tariffs were not included in the trade deal. The White House only noted that the deal “creates a secure supply chain for pharmaceutical products” without giving any additional details.
“Work will continue on the remaining sectors – such as pharmaceuticals and remaining reciprocal tariffs. But – in an important move – the US has agreed that the U.K. will get preferential treatment in any further tariffs imposed as part of Section 232 investigations,” added the British government.
Another key area not covered by the agreement is digital services, with the White House keen to tackle a recent digital services tax imposed by Britain on U.S. tech giants like Google and Meta.
“The Digital Services Tax remains unchanged as part of today’s deal. Instead, the two nations have agreed to work on a digital trade deal that will strip back paperwork for British firms trying to export to the U.S., opening the U.K. up to a huge market that will put rocket boosters on the U.K. economy,” the British government commented.
