The U.K. and the United States just completed a major trade agreement. U.K. Prime Minister Keir Starmer has called it “historic.” The deal is set to start on June 30. Second, it is intended to bolster strategic sectors important to the British economy, primarily the automotive industry. This agreement primarily focuses on safeguarding U.K. The goal is ultimately to usher in better bilateral trade conditions with the U.S., which is by far the world’s largest customer for British-made vehicles.
An additional 227,000 American jobs depend on the fact that cars are, by far, the largest export from the U.K. to the United States. Last year, they constituted 27.4% of all U.K. car exports. Beginning today, the first 100,000 vehicles per year sold from the U.K. to the U.S. are subject to a 10% tariff. This is a major cut from the current 50% tariff levied on cars imported from other trading partners. This change has the potential to refresh the U.K. automotive landscape. It’s been battered by the deep cutbacks imposed by earlier tariff structures.
Beyond automotive exports, the contentious trade deal removes Mexican duties on Britain’s aerospace sector as well. A blanket 10% tariff still applies to U.K. goods imported into the United States, raising concerns about sectors such as iron and steel. Further, the U.S. is currently the fourth largest export market for British iron and steel. So the U.K. Government should be very hopeful of getting 0% tariffs on these important products.
Mike Hawes, CEO of the Society of Motor Manufacturers and Traders (SMMT), highlighted the importance of this trade deal for the automotive industry. He described it as “a huge relief for the U.K. automotive companies that export to this critically important market.” He further added, “It immediately slashes the punitive tariffs that brought the US export market to a standstill and threatened the viability of some of the most famous names in British manufacturing.”
Starmer reiterated the significance of this deal for protecting industries that are essential to the U.K.’s economic backbone. The signed trade deal will both protect American jobs and foster greater cooperation and communication between the two countries. It encourages collaboration between public, private, and nonprofit sectors.
As discussions continue, the U.K. government reiterated its commitment to further negotiations regarding tariffs on steel products, stating, “we will continue to go further and make progress towards 0% tariffs on core steel products as agreed.”