In a significant diplomatic development, U.S. President Donald Trump and British Prime Minister Keir Starmer announced a trade agreement on Thursday aimed at reducing the impact of tariffs on the United Kingdom's automotive and steel sectors. This pact, unveiled during a televised phone call in the Oval Office, marks a strategic effort to bolster economic ties between the two nations on the 80th anniversary of Victory in Europe Day.
While the agreement maintains the baseline 10 percent "Liberation Day" tariffs imposed on U.K. imports last month, it effectively lowers the additional 25 percent tariffs previously placed on the U.K.’s automotive, steel, and aluminum industries. This adjustment is expected to provide much-needed relief for British automakers, who largely depend on the U.S. market for their exports.
President Trump expressed enthusiasm about the agreement, stating, “We won the war together exactly 80 years ago … so there can be no more perfect morning to reach this historic agreement.” He emphasized that the deal would bring the U.K. into "economic security alignment" with the United States, while also highlighting new market access for various agricultural products, including ethanol and beef.
Agriculture Secretary Brooke Rollins supported the president’s remarks, stating, “I know our incredible trade team is looking at all the meats, all the produce, really, all of our agriculture exports.” The agreement also promises unprecedented access for British farmers to the U.S. market, while ensuring that the U.K. retains its strict food standards, with a spokesperson from No. 10 affirming, “We are not going to lower British food standards.”
Under the new terms, the U.K. will receive a quota of 100,000 cars eligible for export to the U.S. under the 10 percent tariff. However, vehicles exceeding this quota will once again be subjected to the 25 percent tariff. Ongoing negotiations will also address Trump’s potential tariffs on pharmaceuticals, a critical sector for the U.K. that exports £6.6 billion to the U.S., as well as proposed 100 percent duties on foreign films.
The reduction of the 25 percent tariffs on steel is a boon for the struggling British industry, which recently faced further challenges that led to the government’s implementation of a state control emergency plan for British Steel. Additionally, a tariff on U.S. ethanol entering the U.K. has been eliminated, while the digital services tax aimed at technology companies remains unchanged.
This agreement represents a notable advancement for the United States, especially as the administration navigates ongoing discussions with numerous countries following the imposition of substantial tariffs last month. It is the first trade deal announced during the 90-day pause on Trump's “Liberation Day” tariffs, signaling a shift towards more cooperative trade relations.
For Prime Minister Starmer, the deal is a strategic win amidst challenging domestic poll numbers, as he seeks to strengthen ties with Washington at a time when many world leaders are adopting a more confrontational stance. In a statement following the Oval Office call, Starmer remarked, “This historic deal delivers for British business and British workers, protecting thousands of British jobs in key sectors including car manufacturing and steel.”
As the Trump administration faces increasing pressure to finalize trade agreements, American consumers, manufacturers, and retailers are bracing for potential price increases in the coming weeks, driven by significant declines in shipments to West Coast ports. This supply chain disruption could lead to shortages in everyday items, including cars, furniture, clothing, and toys.
