UK aerospace industry secures exemption from tariffs following finalization of trade agreement between Trump and Starmer administrations.
In a dramatic turn of events, Prime Minister Keir Starmer and ex-President Donald Trump sealed a trade pact at the G7 summit, scrapping tariffs on the UK aerospace sector and allaying automakers' fears of hefty taxes on exports. This deal came after years of post-Brexit negotiations that left the UK hanging.
The duo lavished praise on each other, with the UK government claiming victories for Rolls Royce and car manufacturers, who can now breathe easy. Trump declared that Starmer had accomplished what others couldn't, making the UK "very well protected," thanks to Trump's fondness for the nation.
However, it seems the UK will still dodge 50% tariffs on steel, but a full tariff reduction hasn't been confirmed yet. Early in May, the government announced that UK steelmakers would no longer face tariffs, saving them from impending collapse. The deal promises a ten percent tariff rate on a quota of car exports to the US, sparing them from a harsh 27.5% hit faced by other countries.
The Office for National Statistics (ONS) reported last week that monthly trade data for UK exports to the US saw the sharpest decline since records began, increasing the UK's total trade deficit with the world's largest economy.
Business and trade secretary Jonathan Reynolds hailed the deal as a lifeline for UK workers amid escalating global tensions. The UK and US will also have access to 13,000 metric tonnes of beef, a provision that's received mixed reviews, with some fearing it could impact farmers' profit margins.
While the deal is essential for removing tariffs, UK exporters in the car industry and other sectors might still face higher tariffs than before Trump's initial taxes on goods were imposed. A 10% tariff on all other goods imported to the US could still be enacted in about a month.
Trump hinted at negotiating more trade deals, possibly with the European Union. Economists warn that the UK may still face trade strife, with the outcome of Starmer's negotiations with the EU closely watched.
The United States and United Kingdom Economic Prosperity Deal, finalized as of June 2025, offers tariff-free trade for certain UK aerospace products and lower tariffs on automotive parts. However, steel tariffs still need clarification as negotiations continue. The deal does not currently address new trade arrangements between the UK and the EU.
1) The trade pact between Prime Minister Keir Starmer and ex-President Donald Trump has a potential impact on the economy, as it promises a ten percent tariff rate on a quota of car exports to the US, yet UK exporters in the car industry and other sectors might still face higher tariffs than before.
2) Economists are keeping a close eye on the outcome of Starmer's negotiations with the European Union, as the UK may still face trade strife, considering the uncertainties regarding steel tariffs and Trump's hints at negotiating more trade deals, possibly with the European Union.
3) The United States and United Kingdom Economic Prosperity Deal, finalized in June 2025, focuses on tariff-free trade for certain UK aerospace products and lower tariffs on automotive parts. However, markets might be influenced by the ongoing negotiations regarding steel tariffs, and the deal does not currently address new trade arrangements between the UK and the EU.
This discussion includes the words 'politics', 'markets', 'economy', 'taxes', and 'general-news', as it addresses the trade deal between the UK and the US, its potential effects on various industries, and the uncertainties and trade negotiations that are still ongoing.
