UK and US Reach Historic Trade Deal, Cutting Tariffs on Automotive and Aerospace Sectors

Strategic Insights -

Prime Minister Keir Starmer has finalized parts of a deal with the US, resulting in significant tariff cuts for the UK's automotive and aerospace sectors. The agreement, reached at the G7 summit, slashes tariffs on car exports to the US from 27.5% to 10%, while eliminating the 10% tariff on aerospace exports. However, the deal leaves the 25% steel tariff intact, with ongoing talks aiming to secure 0% tariffs on core steel products from the UK. The agreement is expected to save hundreds of millions of pounds each year and safeguard thousands of jobs.

Key Takeaways:

  • The historic trade deal between the UK and US has resulted in a 17.5% reduction in tariffs for the UK's automotive sector, from 27.5% to 10%.
  • The deal eliminates the 10% tariff on aerospace exports to the US, providing a significant boost to the sector.
  • The 25% steel tariff remains in place, with ongoing talks focused on securing 0% tariffs on core steel products from the UK.
  • The deal is expected to save hundreds of millions of pounds each year and safeguard thousands of jobs in the automotive and aerospace sectors.
  • Business & Trade Secretary Jonathan Reynolds has stated that the deal will support growth in the UK's vital sectors and protect jobs.
  • The Society of Motor Manufacturers & Traders Chief Executive Mike Hawes has welcomed the agreement, describing it as "good news for US customers and a huge relief for the UK automotive companies that export to this critically important market".

Statistics:

  • The tariff reduction for the automotive sector will result in an estimated 17.5% cost savings for UK car manufacturers exporting to the US.
  • The deal will eliminate the 10% tariff on aerospace exports, worth approximately £500 million to the UK aerospace sector each year.
  • The ongoing talks on steel tariffs aim to secure 0% tariffs on core steel products from the UK, which could result in significant savings for the sector.
  • The deal is expected to save hundreds of millions of pounds each year, supporting growth and protecting jobs in the automotive and aerospace sectors.
  • The UK bioethanol industry has warned that the removal of tariffs on US ethanol imports could make it impossible to compete with heavily subsidized American products.

Sources:

  • Alliance News, "Tariff cuts for UK automotive and aerospace sectors come into force," (no date)
  • Press Association: Finance, "UK and US finalise historic trade deal, cutting tariffs on car and aerospace exports," (no date)
  • Alliance News Ltd, "Associated British Foods PLC closes 0.3% lower after bioethanol plant warning," (no date)