The US will carve out import quotas for UK-produced cars and, eventually, reduce tariffs on UK steel and aluminum, under a preliminary deal US president Donald Trump and UK prime minister Keir Starmer announced today.
The Trump administration will allow UK car manufacturers to export 100,000 cars to the US at a 10pc tariff rate, instead of the 25pc tariff to which all foreign auto imports are subject.
The US and the UK will negotiate a "trading union" on steel and aluminum that will harmonize supply chains, US commerce secretary Howard Lutnick said. The US commended the UK government on taking control of Chinese-owned steelmaker British Steel last month. As a result of that action, under yet to be negotiated arrangements, the US would reconsider the UK's inclusion in its 25pc tariffs on steel and aluminum, the White House said.
Starmer, speaking after the ceremony, told reporters that US tariffs on the UK-sourced steel and aluminum would, in fact, fall to zero.
Trump announced the deal during a ceremony at the White House, with Starmer phoning in. The two leaders suggested that their preliminary deal was as significant as the end of World War II in Europe, 80 years ago.
But that deal, which Trump described as "full and comprehensive" hours before its announcement is anything but that.
Under the "US-UK Agreement in Principle to negotiate an Economic Prosperity Deal", the US will maintain the 10pc baseline tariff on nearly all imports from the UK that went into effect on 5 April, Trump said. The UK, Trump said, would lower the effective rate on US imports to 1.8pc from 5.1pc.
The actual details of the agreement are yet to be negotiated. "The final deal is being written up" in the coming weeks, Trump said, adding that it was "very conclusive".
Boeing, beef and biofuel
The UK would commit to buying $10bn worth of Boeing airplanes, Trump said. He described the UK market as "closed" to US beef, ethanol and many other products, and said that the UK agreed to open its agricultural markets as a result of his deal.
US ethanol exports to the UK, in fact, rose by 23pc year-on-year in March.
Under the deal, the UK would expand market access to US ethanol, creating $500mn more in US exports, the White House said.
The UK will reduce to zero the tariff on US-sourced ethanol, the UK Department of Business said, adding that "it is used to produce beer".
Trump previewed the preliminary deal with the UK as the first of the many trade agreements the US administration is negotiating with many other countries. Trump contended today that there are trade talks underway with the EU and expressed confidence that the US-China trade discussions expected over the weekend would produce results.
But Trump added that he will not lower the high tariffs on imports from nearly every US trade partner he imposed last month and described the UK's 10pc tariff rate as a favor to that country.
