The United Kingdom and the United States have reached a limited agreement easing trade tariffs on a number of key goods, including cars, steel, and aluminium, though officials on both sides have confirmed that this is not a full free-trade deal.
The agreement rolls back some of the tariffs imposed during former President Donald Trump’s administration, particularly those affecting British exports to the US. While Trump heralded the development online as a “major trade deal,” it falls short of a formal free trade agreement, which would require approval from Congress.
Instead, this deal is a narrow arrangement focused on specific sectors, with further negotiations and legal formalities expected in the months ahead.
Car Tariffs Slashed but Capped
Under the new terms, tariffs on UK car exports to the US have been reduced from a combined 27.5% to 10%—but only for up to 100,000 vehicles annually, roughly the current export volume. Any cars exported beyond that quota will face a steep 27.5% duty. The UK remains the US’s second-largest supplier of cars, valued at £9 billion in exports last year.
Jaguar Land Rover, which sends nearly a quarter of its vehicles to the US, welcomed the move, saying it provides “greater certainty” for the sector. However, industry leaders have cautioned that the quota may limit long-term growth.
Steel and Aluminium Tariffs Lifted – With Conditions
Tariffs of 25% on UK steel and aluminium have been scrapped, offering relief to firms like British Steel. However, the US has introduced quotas and conditions tied to the origin of raw materials and manufacturing processes, raising questions over how much of the sector will benefit. The UK exports approximately ÂŁ700 million in these metals annually, but related goods such as machinery and gym equipment push that figure above ÂŁ2.2 billion.
The industry association UK Steel welcomed the move but warned that more clarity was needed on quotas, supply chain rules, and timing.
Pharmaceuticals and Digital Tax Still Unresolved
No definitive agreement has been reached on pharmaceutical tariffs, despite their significance to bilateral trade. British drug exports to the US were worth ÂŁ6.6 billion last year, second only to vehicles.
Discussions also stalled on the UK’s 2% digital services tax, which affects major US tech firms like Meta and Google. Washington criticised the tax as “unjustified” and has called for its removal, while the UK said only that talks on a potential digital trade deal would continue.
Agricultural Concessions Without Lowering Standards
The UK has raised its import quota on US beef from 1,000 to 13,000 metric tonnes and removed the existing 20% tariff. In exchange, British farmers have received a reciprocal tariff-free export quota. UK officials confirmed that domestic food safety standards, including bans on hormone-treated beef, will remain unchanged.
The deal also includes the scrapping of tariffs on US ethanol, raising concerns from the National Farmers Union about competition for British arable farmers.
While the agreement provides targeted relief and signals warmer trade relations, it is far from the comprehensive deal once promised. Negotiations are expected to continue across multiple sectors.
