US-UK Trade Deal Announced, but 10% Tariffs on British Exports Stay
The new US-UK trade deal is making headlines, but many British exporters are still facing steep 10% tariffs. On Thursday, US President Donald Trump and UK Prime Minister Keir Starmer revealed a limited trade agreement meant to open new markets and lower some barriers. However, the deal falls short of ending Trump’s tariffs on British exports, leaving both hope and disappointment among businesses.
What’s Inside the Limited US-UK Trade Deal?
The main feature of the deal is its focus on selective tariff reductions and modest improvements. While the US has agreed to lower duties on British auto exports and provide room for more agricultural goods, the 10% tariffs on many British products are still in place. President Trump called the arrangement a “tremendous market opportunity” for American exporters, especially as barriers to doing business with Britain are eased. Yet, for UK manufacturers, these tariffs remain a big challenge. “The deal includes billions of dollars of increased market access for American exports, especially in agriculture, dramatically increasing access for American beef, ethanol, and virtually all of the products produced by our great farmers,” Trump emphasized, highlighting the benefits for US producers.
The announcement came with much pageantry from both leaders. Starmer emphasised that the deal will protect and create jobs, boost transatlantic trade, and open up market access on both sides. The plan lowers average UK tariffs on US goods from 5.1% to 1.8%, but does not match that generosity in the other direction for all goods, keeping the 10% duties in force.
Trump Tariffs on British Exports Cause Mixed Reactions
US-UK Trade Deal Highlights
Business groups like the British-American Business group welcomed new openings but expressed disappointment that the Trump tariffs on British exports remain largely intact. The automotive sector, for instance, celebrated reduced US tariffs on British vehicle imports (now 10%, down from 27.5%), but the lower duty only covers a quota of 100,000 vehicles per year. Most other British goods continue to face those restrictive tariffs, creating uncertainty for exporters.
The deal contains other highlights:
- Steel and Ethanol: US tariffs on UK steel go from 25% to zero. Britain’s 19% tariffs on US ethanol are also scrapped under generous quotas.
- Beef and Agriculture: For the first time, UK farmers can export 13,000 tonnes of beef to the US duty-free. However, UK food standards remain unchanged, so US beef bred with growth hormones is still banned.
- Car Industry: Jaguar Land Rover resumed US shipments after a pause, but only under the new quota. Rolls-Royce aircraft engines will enter the US duty-free, giving a boost to British aerospace.
Still No Resolution on Digital Services Tax
A sticking point in the talks is the UK’s digital services tax, a 2% revenue charge on online marketplaces. The US wants changes, but there’s no agreed action yet. Later negotiations could address this unfinished business, and both sides acknowledge they still need to do more “serious work.”
Market Response and Wider Impact
The US-UK trade deal announcement sent Wall Street higher, with major airline stocks and Rolls-Royce shares rallying on news of lower US tariffs. Economists see trade integration as a path to stronger, long-term growth, though the immediate economic effect on the British economy may be modest. “The UK was largely closed, very much closed to trade, and now it’s opened,” Trump proclaimed, underscoring the broader market access achieved through the agreement.
US Commerce Secretary Howard Lutnick estimated the deal could bring new US exports to the UK worth $5 billion a year and boost US tariff revenue by $6 billion annually. Nevertheless, British exporters remain frustrated that Trump tariffs on British exports still add costs and limit the full potential of transatlantic trade.
Trump’s Wider Tariff Strategy and Next Moves
President Trump’s administration has imposed wide-ranging tariffs—not only on the UK, but on goods from 57 other partners. While some duties were paused for talks, others, like the 25% tariff on auto imports and new probes into pharmaceuticals and semiconductors, remain in effect. The US designed this aggressive trade policy to shrink its $1.2 trillion trade deficit and pressure partners into making deals.
US negotiators are also preparing for high-stakes talks with China, where 145% tariffs on each side have led to a virtual trade stalemate. The outcome of these discussions could reshape the entire global trade system.
Challenges and Opportunities in the US-UK Trade Deal
Both leaders highlighted the warm relationship between the US and UK, and spoke of the deal as a “historic breakthrough.” But the fact that Trump tariffs on British exports stay in place has introduced real tension. The UK hopes that this deal is just the start—that more progress will follow. Starmer’s government will need to continue delicate balancing between trade with the US, China, and the EU post-Brexit, all while supporting struggling industries at home.
On sensitive issues like agricultural standards, both sides agreed that no UK rules will change. This was important to the Labour government, which promised not to weaken food safety. Yet, substantial parts of the US-UK trade deal remain unfinished, especially on digital services and pharmaceuticals.
Source
Reuters – Trump, Starmer hail limited US-UK trade deal, but 10% duties remain
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