US-UK tariffs agreement: What you need to know

Time of India

10-05-2025

File Photo: US President Donald Trump with UK Prime Minister Keir Starmer
What do we know so far?
The preliminary deal with the United Kingdom slashes tariffs on British-made cars, eliminates duties on steel and aluminum, and opens the UK market to American farmers.
However, the pact, signed at the White House on Thursday, is not the "major trade deal" that Trump touted on social media.
A full trade deal takes months or years to negotiate and must be ratified by Congress, which would further extend the timeline.
The bilateral agreement is the outline of a limited trade deal that will still need extensive negotiations to finalize.
Under the plan, the tariff on British-made cars — the UK's biggest export to the US — will be reduced from 27.5 per cent to 10 per cent.
That rule applies to the first 100,000 vehicles imported into the US from the UK, which the government said was around the total number of UK-exported cars.
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Anything above that figure will face tariffs of 25 per cent.
Trump's recently imposed 25 per cent tariff on UK steel and aluminum imports will be cut to zero.
The White House statement cited the reason as "the economic security measures taken by the UK to combat global steel excess capacity."
Most other UK imports will still face a 10per cent tariff under Trump's reciprocal tariff policy announced last month.
The UK agreed to cut the tariff on US ethanol to zero, while US farmers will gain access to the UK market for the first time.
However, Britain was able to maintain its ban on US chlorine-washed chicken and hormone-treated beef, amid concerns about welfare and environmental standards.
The UK's National Farmers' Union (NFU) warned that easing UK access to US beef and ethanol would disadvantage domestic producers.
"Our biggest concern is that two agricultural sectors have been singled out to shoulder the heavy burden of the removal of tariffs for other industries in the economy," said NFU President Tom Bradshaw in a statement.
The tariff on UK aircraft parts will be cut to zero, while the pact also closes loopholes, cuts red tape and boosts protection for intellectual property.
It creates a secure supply chain for pharmaceutical products and ensures regulatory alignment to streamline trade in this sector.
The agreement also includes provisions for digital trade, facilitating smoother cross-border data flows and enhancing cybersecurity cooperation.
Was a good deal struck for both sides?
Trump said he was "thrilled to announce that we have reached a breakthrough trade deal with the United Kingdom," adding that the agreement included "billions of dollars of increased market access for American exports."
The White House said the deal would create a $5 billion (€4.4 billion) opportunity for new US exports, including beef and ethanol.
UK Prime Minister Kier Starmer said the limited deal would save jobs in the British auto and steel sectors and was just the beginning of improved trade with the US.
The US was Britain's biggest trading partner last year, according to government statistics, though the bulk of Britain's exports to the US are services rather than goods.
UK Ambassador to the US Peter Mandelson, who was alongside Trump at the White House, said the deal would prevent imminent layoffs at a Jaguar Land Rover facility in the West Midlands.
But US automakers voiced strong opposition, with Matt Blunt, president of the American Automotive Policy Council (AAPC), saying the deal means "it will now be cheaper to import a UK vehicle with very little US content [parts] than a ...
vehicle from Mexico or Canada that is half American parts."
US automakers now face 25 per cent tariffs on vehicles assembled in Canada and Mexico.
So what happens now?
The UK government said the tariff cuts would take effect "as soon as possible."
However, the pact is currently just an "agreement in principle" that will need months of detailed negotiations.
Outstanding issues on pharmaceuticals, food standards and possibly the UK's digital services tax, which hits US tech giants, will need to be resolved.
Any completed deal will need approval by the US Congress, although some parts can be implemented by Trump by executive order.
It will also need UK parliamentary scrutiny, and any significant opposition, such as US beef treated with growth hormones, could cause delays.
Could the US-UK deal be a roadmap for other countries?
The US-UK deal may set the tone for other trading partners to reverse Trump's sweeping tariffs, especially China, whose relations with the Trump administration have hit a new low over tariffs.
The US and China are set to meet in Switzerland this weekend, with market watchers hoping for a breakthrough in their standoff.
Washington last month raised tariffs on Chinese goods to 145 per cent, while Beijing retaliated with 125 per cent tariffs on most US imports.
Several other countries, including Japan and Vietnam, have lined up to hold talks with Washington to avert the worst of the duties that range from 10 per cent to 49 per cent, excluding China.