President Donald Trump has signed an executive order confirming elements of a tariff agreement between the UK and the US. This move aims to reduce tariffs on UK cars entering the US and brings into force parts of a deal initially agreed last month, offering some relief to British businesses amidst broader US tariffs.
Key Takeaways
- The order reduces the tariff on UK cars to 10% from 25% for up to 100,000 vehicles.
- It includes the removal of tariffs on certain aerospace products.
- The UK will grant a tariff-free quota for US ethanol and scrap a 20% tariff on US beef imports.
- The deal does not fully address steel tariffs, which remain at 25% for UK imports.
- This is not a comprehensive free-trade agreement, but a more limited tariff pact.
Tariff Reductions and Exemptions
The executive order signed by President Trump will significantly impact UK car exports to the US. Under the new terms, up to 100,000 UK cars will face a 10% tariff, a substantial reduction from the previous 25% import tax. This provides a competitive edge for UK manufacturers over those from countries like Italy or Germany, which are still subject to the higher tariff.
Additionally, the agreement includes the removal of tariffs on specific aerospace products, further easing trade between the two nations. The UK, in turn, has committed to granting a tariff-free quota of 1.4 billion litres of US ethanol and eliminating a 20% tariff on US beef imports, raising the quota to 13,000 tonnes. However, concerns have been raised by ABF Sugar, a major bioethanol producer in the UK, regarding potential redundancies due to increased competition.
Unresolved Steel Tariffs
Despite the progress on other fronts, the issue of steel tariffs remains largely unresolved. While the order mentions a similar system for steel and aluminium, it does not specify the details or commit to axing the 25% import tax on UK steel. The UK government has stated its intention to continue working towards 0% tariffs on core steel products, acknowledging that more technical work is needed. The current 25% tariff could increase to 50% if an agreement is not reached by 9th July, posing a significant challenge for UK steelmakers, particularly given the ‘melted and poured’ requirement for tariff exemptions.
Broader Context and Criticisms
Prime Minister Sir Keir Starmer hailed the agreement as a "very important day" and a "sign of strength" in the UK-US relationship. This pact is the first the White House has announced since imposing widespread tariffs earlier this year, which caused global financial turmoil. However, it is crucial to note that this is not a full free-trade deal, as President Trump lacks the authority to sign such agreements without Congressional approval. Opposition parties in the UK have criticised the deal, with Conservative leader Kemi Badenoch calling it a "tiny tariff deal" and Liberal Democrat Treasury spokesperson Daisy Cooper demanding transparency and impact assessments on British industries and food standards.
