UK-US formally agree trade deal, slashing car tariffs; steel, aluminum still pending

The US and the UK have formally signed a trade deal allowing British car manufacturers to export up to 100,000 cars to the US annually at a 10% tariff rate, implementing part of the landmark trade arrangements agreed last month between the two countries.

In addition, the UK aerospace sector will see its tariffs for deliveries to the US removed completely by the end of the month, according to a statement from the UK government following a meeting between US President Donald Trump and UK Prime Minister Keir Starmer on June 16 during a G7 summit in Canada.

However, the deal signed this week does not yet include steel and aluminium provisions included in the May trade pact.

According to last month's agreement, the UK is set to become the only country so far to be exempted from a global tariff of 50% being imposed by the US on steel and aluminium volumes entering the country, the UK government said.

Discussions on the implementation of this appear to be continuing.

"The UK is the only country to have secured this agreement with the US, which reduces car export tariffs from 27.5%, saves car manufacturers hundreds of millions a year, and protects tens of thousands of jobs, delivering on our Plan for Change," the UK government said in a statement June 17.

"Bringing trade deals into force can take several months, yet we are delivering on the first set of agreements in a matter of weeks. And we won't stop there," Business and Trade Secretary Jonathan Reynolds said.

"As part of our Plan for Change, this government is doing all it can to reduce the pressures on businesses by lowering costs, speeding up delivery times and helping them to navigate in a time of global uncertainty," he added.

"This is great news for the UK automotive industry, helping the sector avoid the severest level of tariffs and enabling many manufacturers to resume deliveries imminently," Society of Motor Manufacturers and Traders Chief Executive Mike Hawes said. "We wait to see the full details of the deal and how it will be administered but this will be a huge reassurance to those that work in the sector and bolster the confidence of our important US customers."

According to one source close to the UK government, US President Donald Trump has reaffirmed the intention to reduce its section 232 tariffs on UK steel and aluminium shipments to 0%.

"As the prime minister and President Trump have again confirmed, we will continue to go further and make progress towards 0% tariffs on core steel products as agreed," the UK government said in its statement.

Industry association UK Steel's Director-General Gareth Stace told Platts that it is "heartened to see that the UK-US deal agreed by Sir Keir Starmer and President Donald Trump has taken another step forward."

"Yesterday's meeting shows that the prime minister is personally taking responsibility for the long-term relationship of our steel industry with the US market," he added.

"We look forward to imminently benefiting from a tariff rate cut similar to that which the automotive and aerospace industries will enjoy in seven days. The UK steel industry badly needs clarification over the 'melted and poured' requirement, and the level of quotas available to UK steelmakers so that we can restore the historical trade routes that have served both the UK and the US economies for many years," Stace said.

The US is the UK's second-largest export market for steel. According to data from UK Steel, the UK exported 180,000 mt of semi-finished and finished steel to the US in 2024, worth GBP370 million. This accounted for 7% of the UK's total steel exports by volume and 9% by value.