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2 Jun 2025 15:21
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  •   Home > News > International

    US and UK strike trade deal as Trump slashes tariffs on British steel and cars

    It's the first deal between the US and one of its trading partners since Donald Trump up-ended global trading relationships with his "liberation day" tariffs.


    Donald Trump has agreed to slash US tariffs on British cars and steels as part of a "historic" trade deal between America and the UK.

    The agreement is the first to be announced since Mr Trump triggered a global trade war with a barrage of levies on trading partners after his return to the White House in January.

    The joint announcement by the US president and UK Prime Minister Keir Starmer was made on the 80th anniversary of VE Day, when the two countries fought side-by-side to defeat Nazi Germany. 

    The pact, which is expected to save thousands of jobs in British industry threatened by the Trump administration's tariff agenda, will see tariffs on steel and aluminium exports from Britain to the US cut from 25 per cent to zero. 

    In addition, tariffs on an annual quota of 100,000 British cars sold to the US will be cut from 27.5 per cent to 10 per cent. 

    Britain, meanwhile, agreed to lower its tariffs to 1.8 per cent from 5.1 per cent and provide greater market access to US goods. 

    The 10 per cent "baseline" tariff, placed on most of America's trading partners on so-called "liberation day" last month, remains in place. 

    "It opens up a tremendous market for us," Mr Trump said during a teleconference, which was broadcast on Thursday, local time.

    "This is a really fantastic, historic day," Sir Keir said by teleconference.

    The US has been under pressure from investors to strike deals to de-escalate its tariff war after Mr Trump's often chaotic policymaking up-ended global trade with friends and foe alike, threatening to stoke inflation and start a recession.

    Top US officials have engaged in a flurry of meetings with trading partners since the president on April 2 imposed a 10 per cent tariff on most countries, along with higher rates for many trading partners that were then suspended for 90 days.

    The US has also imposed 25 per cent tariffs on autos, steel and aluminium, 25 per cent tariffs on Canada and Mexico, and 145 per cent tariffs on China. US and Chinese officials are due to hold talks in Switzerland on Saturday.

    With the British economy struggling to grow, the tariffs had added to the pressure on Sir Keir's government.

    Jaguar Land Rover had paused its shipments to the US for a month and the government was forced to seize control of British Steel to keep it operating.

    While seeking a deal with the US, Britain had refused to lower its food standards, which are closely aligned with the European Union. 

    However, Britain's farming trade union has said that some US producers who do not use growth hormones or antimicrobial washes could be given greater market access.

    The UK government has been seeking to build new trading relationships post-Brexit with the US, China and the EU without moving so far towards one bloc that it angers the others.

    There are also domestic political risks.

    Polling shows the government remains deeply unpopular, making any move to cut taxes on multi-national tech companies a big risk.

    Britain's digital service tax, levied at 2 per cent of UK revenue for online marketplaces, search engines and social media platforms, was introduced in 2020 in response to an outcry about tax avoidance by big tech. It will continue unchanged.

    • The 10 per cent baseline tariff introduced by Mr Trump remains in place.
    • Tariffs on some British-made cars will be reduced from 27.5 per cent to 10 per cent. British car-makers will be given a quota of 100,000 cars a year that can be sent to the US at the lower tariff rate.
    • Tariffs on British steel exported to the US will be cut from 25 per cent to zero. 
    • Plane parts can be exported to the US from the UK tariff-free. In return, a British airline is expected to buy $US10 billion ($15.5 billion) of Boeing aeroplanes.
    • There will be reciprocal market access on beef, with British farmers given a tariff-free quota for 13,000 tonnes. Britain will also remove tariffs on US ethanol, which is used to produce beer.
    • The deal outlines plans for further talks on pharmaceuticals. 

    ABC




    © 2025 ABC Australian Broadcasting Corporation. All rights reserved

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