BlogHear.com | International Trade News
London/Washington – The United Kingdom and the United States have announced a limited agreement to reduce or remove certain tariffs on specific goods traded between the two countries. While not a full-fledged trade deal, the move is being hailed as a step toward easing transatlantic trade tensions.
US President Donald Trump referred to the arrangement as a “major trade deal,” but the agreement does not constitute a formal trade pact, which requires Congressional approval. Instead, this deal reverses or reduces a selection of tariffs that were part of Trump’s global 10% blanket tariff policy.
Key Takeaways from the Agreement
- Automobile Tariffs Cut: The 25% US import tax on UK cars and car parts has been reduced to 10% for up to 100,000 vehicles annually—matching current export levels. Exports beyond that limit will face a steep 27.5% tariff.
- Steel and Aluminium Relief: The 25% tariffs on UK steel and aluminium have been scrapped, though quotas and conditions remain unclear. British Steel and others welcome the change, but industry bodies warn more clarity is needed on volume limits and qualifying products.
- Aircraft Components Included: Rolls-Royce engines and plane parts can now be exported tariff-free to the US.
Key Areas of Concern Remain
- Pharmaceuticals: While both sides committed to negotiating favorable terms for pharmaceutical trade, no specific resolutions have been made yet. Pharmaceuticals are among the UK’s top exports to the US, valued at £6.6 billion in 2024.
- Digital Services Tax: The UK’s 2% digital services tax remains unchanged. The US has voiced strong opposition, calling it “discriminatory” and pressing for its removal. A separate digital trade deal is under discussion.
- Food Standards and Agricultural Products: The UK maintains its ban on hormone-treated beef, aligning with EU standards. However, the UK did raise its quota on US beef imports from 1,000 to 13,000 metric tons under favorable tariff conditions.
- Bioethanol Imports: The UK has scrapped tariffs on ethanol imports from the US. British farmers have raised concerns about potential impacts on domestic crop prices.
Industry and Government Reactions
Jaguar Land Rover welcomed the car tariff cap, citing increased stability for the sector. Meanwhile, Steel UK urged further clarification on quota rules and timelines. The National Farmers Union expressed concern about increased bioethanol imports undermining British arable farming.
Chancellor Rachel Reeves signaled openness to further lowering tariffs on US imports, while both nations emphasized ongoing negotiations as they explore a more comprehensive economic partnership.
The agreement comes amid broader global trade uncertainties and follows recent tariff escalations and resets between the US and several of its major trading partners.
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