A landmark trade deal between Prime Minister Keir Starmer and U.S. President Donald Trump has officially come into force, marking a powerful boost for British manufacturers. Announced earlier in June, the deal slashes high U.S. tariffs on UK-made cars and aircraft parts, making it easier and cheaper for British companies to sell their products in the American market.
UK-US Trade Deal Comes Into Force, Slashing Car and Aircraft Tariffs
Until now, UK car makers had to pay a massive 27.5% tariff to export vehicles to the U.S. That rate has now been reduced to just 10%. Aircraft engines and parts, which were taxed at 10%, will now enter the U.S. market tariff-free.
This is the first and only automotive trade agreement of its kind signed with the current U.S. administration. It is expected to save British car and aerospace businesses hundreds of millions of pounds every year and protect hundreds of thousands of jobs across the UK.
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Prime Minister Keir Starmer praised the deal, calling it a major moment for UK industries. “From today, our world-class automotive and aerospace industries will see tariffs slashed, safeguarding key industries that are vital to our economy,” he said.
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Jonathan Reynolds, the UK Business and Trade Secretary, said the deal was designed to protect jobs and support growth. “British car manufacturers can now export to the U.S. at a significantly reduced 10% tariff rate – down from 27.5% – and aerospace goods will see 10% tariffs removed,” he stated.
For the car industry, this is a breakthrough. The Society of Motor Manufacturers and Traders had raised concerns earlier. They warned the 27.5% tariff was too high. It made it nearly impossible to compete in the U.S. market. Mike Hawes, Chief Executive of SMMT, said the new deal brings immediate relief. It slashes the punitive tariffs hurting British car exports. Those high tariffs had stopped most UK car exports to the U.S. Now, British manufacturers have a better chance to compete again.
The aerospace sector also welcomed the move. Kevin Craven, CEO of ADS Group, said the industry, which supports more than 100,000 highly skilled jobs in the UK, is pleased with the new trade terms. He noted the sector’s resilience and its important role in the global supply chain.
Steel and Aluminum Tariffs Still Unresolved
While the new deal brings big gains for cars and aircraft parts, the issue of tariffs on UK steel and aluminum remains open. The U.S. recently imposed tariffs of up to 50% on steel and aluminum from other countries. So far, the U.S. has exempted the UK, but this exemption could end by July 9 without a separate agreement.
Despite this, both leaders have confirmed their intention to keep working toward 0% tariffs on core steel products. The UK government stated, “We will continue go further and make progress towards 0% tariffs on core steel products as agreed.”
The agreement is part of a broader trade effort by the UK government. The UK recently signed a trade deal with India that is expected to add £4.8 billion to the economy. It also renewed an agreement with the EU that focuses on food safety and emissions standards, which should bring in nearly £9 billion by 2040.
This new UK-US deal highlights the UK’s strategy to sign fast, targeted agreements that help businesses right away. From today, British cars and aircraft parts will be more competitive in the American market, opening doors for sales and helping British workers keep their jobs.