A deal to cut import tariffs between the US and UK has come into force, giving British car makers preferential access to the world’s biggest consumer market.
It will allow UK motor manufacturers to sell up to 100,000 vehicles to the US at a tariff of 10% – a big advantage over international competitors – while tariffs on UK aerospace exports have been cut to zero
In return, the UK will scrap tariffs on US ethanol imports – a move which the British bioethanol industry says will make it impossible for it to compete.
However, UK steel and aluminium remain subject to a 25% tariff, which could double to 50% if the UK and US do not reach a deal by deadline day on 9 July.
The agreement, which was signed at the G7 summit earlier this month, cuts some of the sweeping tariffs imposed by US President Donald Trump that sent global markets into chaos in April.
UK Prime Minister Sir Kier Starmer called it a “historic deal” which would safeguard key industries vital to the British economy.
In a Fox News interview aired on Sunday, Trump said he was unlikely to extend the 9 July deadline he has imposed on countries to secure deals with the US to avoid the higher tariffs.
Under the US-UK agreement, UK carmakers can sell up to 100,000 cars a year to the US with a 10% tariff, down from 27.5%.
Tariffs on the UK aerospace sectors, too, will be removed.
The Business and Trade Secretary, Jonathan Reynolds, said the reducing tariffs would save sectors “hundreds of millions each year” and safeguard “thousands of jobs”.
However, details on steel and aluminium tariffs have yet to be finalised. They remain subject to a 25% tariff, which could double to 50% if the UK and US do not reach a deal by the deadline.
For its part, the UK will scrap a 20% tariff on US beef imports and raise the quota to 13,000 tonnes.
Up to 1.4 billion litres of US ethanol can also arrive in the UK tariff-free, doing away with the 19% tariff rate on US ethanol shipments previously.
The UK-US trade settlement goes live even as the rest of the world braces for the looming tariff deadline – a date President Trump has indicated is unlikely to be postponed, though he hasn’t ruled it out entirely.
“I don’t think I’ll need to,” he told Fox News, adding, “I could, no big deal”.
In April, Trump imposed sweeping reciprocal duties on most trading partners worldwide but paused the tariffs days later to allow for negotiations.
On Friday, Trump said he had called off negotiations with Canada owing to the country’s digital services tax.
However, on Sunday, Canada’s finance ministry said it had rescinded its digital services tax in a bid to advance trade talks.
The nations share among the largest trading relationships globally, involving more than $900bn (£656bn) of goods and services in 2024.
Other countries are also in the queue to broker deals with the US.
Thailand’s commerce minister Pichai Naripthaphan has said the country will hold talks with the US, its largest trade partner, with hopes of reducing the tariffs imposed on Thai goods from 36% to as low as 10%.
