UK-US tariff deal: Cars, steel and beef

The UK and the US have reached a deal over tariffs on some goods traded between the countries.

President Donald Trump’s blanket 10% tariffs on imports from countries around the world remains in place and still applies to most UK goods entering the US.

But the deal has reduced or removed tariffs on some of the UK’s exports, including cars, steel and aluminium.

Here’s an at-a-glance look at what’s in the deal.

Trump declared on social media this announcement would be a “major trade deal” – it’s not.

He does not have the authority to sign the type of free-trade agreement India and the UK finalised earlier this week – this lies with Congress.

Congress would need to approve a trade agreement, which would take longer than the 90-day pause in place on some of Trump’s tariffs.

This is an agreement which has reversed or cut some of those tariffs on specific goods.

What was announced today is only the bare bones of a narrow agreement.

There will be months of negotiations and legal paperwork to follow.

Trump had placed import taxes of 25% on cars and car parts coming into the US on top of the existing 2.5%.

This has been cut to 10% for a maximum of 100,000 UK cars, which matches the number of cars the UK exported last year.

But any cars exported above that 100,000 will be subject to a 27.5% import tax.

Cars are the UK’s biggest export to the US – worth about £9bn last year.

Jaguar Land Rover, which exports almost a quarter of its annual production to the US, said the deal “secures greater certainty for our sector and the communities it supports”.

But car industry leaders have told the BBC the quota could effectively put a ceiling on the number they can export competitively.

The UK currently imposes a 10% on US car imports, but it is not yet clear if there had been any change to this.

The US has previously demanded the import tax be cut to 2.5%, and Chancellor Rachel Reeves has indicated she is open to such a cut.

Trump also announced that Rolls Royce engines and plane parts will be able to be exported from the UK to the US tariff-free.

He also said the UK was buying $10bn worth of Boeing planes from the US.

A 25% tariff on steel and aluminium imports into the US that came into effect in March has been scrapped as part of this deal.

This is good news for firms such as British Steel which was brought under government control as it struggled to stay operational.

The White House said it would impose a quota on the “most favoured nation rates for UK steel and aluminium and certain derivative steel and aluminium products.”

It is currently unlear how much of these products the UK will be able to export to the US under this quota system without paying more.

The UK exports a relatively small amount of steel and aluminium to the US, around £700m in total.

However the tariffs also cover products made with steel and aluminium, including things such as gym equipment, furniture and machinery.

These are worth much more, about £2.2bn, or about 5% of UK exports to the US last year.

It is not yet clear whether the scrapping of tariffs will apply to steel derivative products and whether only steel melted and poured in the UK will benefit.

What will be agreed on pharmaceuticals is still unknown with the UK saying work would continue on this and the remaining reciprocal tariffs.

The US said both countries “intend to promptly negotiate significantly preferential treatment outcomes on pharmaceuticals and pharmaceutical ingredients.”

Most countries, including the US, imposed few or no tariffs on finished drugs, as part of an agreement aimed at keeping medicines affordable.

Pharmaceuticals are a major export for the UK when it comes to US trade – last year sales of medicinal and pharmaceutical products were worth £6.6bn ($8.76bn) making it the UK’s second-biggest export to the US.

It’s also America’s fourth biggest export to the UK, valued at £4bn ($5.3bn) last year.

The president has not announced any trade restrictions on medicines yet.

There was no change to the UK’s 2% digital services tax on US firms in this deal, despite reports there could be.

Businesses that run social media, search engines or online marketplaces pay this tax which applies to revenues derived from UK users.

Firms only have to pay it if they raise more than £500m in global revenues and £25m from UK users annually.

But this is a threshold easily met by US tech giants like Meta, Google, Apple.

The UK reportedly netted nearly £360m from American tech firms via the tax in its first year.

Instead of any change to the digital services tax the UK and US had “agreed to work on a digital trade deal”, the UK government said.

It said this would “strip back paperwork for British firms trying to export to the US – opening the UK up to a huge market that will put rocket boosters on the UK economy”.

US beef exports to the UK had been subject to a 20% tariff within a quota of 1,000 metric tons. The UK has scrapped this tariff and raised the quota to 13,000 metric tonnes, according to the White House document.

In return, the UK has been given a tariff-free quota for 13,000 metric tonnes of exports, which trade ministers said was the “first time” British farmers had been given this kind of deal.

Crucially, there will be no weakening of UK food standards on imports as part of this deal, the UK government statement said.

Many American farmers use growth hormones as a standard part of their beef production, something that was banned in the UK and the European Union in the 1980s.

The US has previously pushed for a relaxation of rules for its agricultural products, including beef from cattle that have been given growth hormones.

This is an area where the UK has chosen alignment with EU – and the forthcoming “Brexit reset” with the EU – over the US.

The tariff on ethanol which is used to produce beer coming into the UK from the US has also been scrapped.

“They’ll also be fast tracking American goods through their customs process, so our exports go to a very, very quick form of approval, and there won’t be any red tape,” Trump said.