The Government yesterday secured a ‘first-of-a-kind’ trade agreement with the USA — the second major trade announcement this week – following the India Free Trade Agreement on Tuesday. This agreement with the USA which will slash tariffs delivers for UK carmakers, steelworks and farmers, will protect jobs and provide stability for exporters.
As part of the deal, car export tariffs will reduce from 27.5% to 10% — saving hundreds of millions a year for Jaguar Land Rover alone. This will apply to a quota of 100,000 UK cars, almost the total the UK exported last year.
Furthermore, the UK steel industry – which was on the brink of collapse just weeks ago – will no longer face tariffs thanks to the new deal. The 25% tariff has been reduced down to zero, meaning UK steelmakers can carry on exporting to the USA. This follows in the footsteps of last month’s intervention from the Government to take control of British Steel to save thousands of jobs in Scunthorpe.
In what has been described as a win for both nations, a new reciprocal market access on beef has been agreed – with UK farmers given a quota for 13,000 metric tonnes. There will be no weakening of UK food standards on imports. We will also remove the tariff on ethanol – which is widely used in our manufacturing sector - coming into the UK from the USA, down to zero.
Mutual benefitPrime Minister, Keir Starmer, said: “This historic deal delivers for British business and British workers protecting thousands of British jobs in key sectors including car manufacturing and steel. My Government has put Britain at the front of the queue because we want to work constructively with allies for mutual benefit rather than turning our back on the world. This is jobs saved, jobs won but not job done and our teams will continue to work to build on this agreement.”
Business and Trade Secretary Jonathan Reynolds said: “I am delighted our calm approach and proactive engagement with the USA has resulted in this deal which cuts tariffs for UK industry and cuts costs for businesses. Businesses across the country will be glad to see our approach working, but this is only the beginning. We look forward to strengthening our trading relationship with the USA through a wider economic deal, which will help us to deliver on our Plan for Change to provide economic stability and make this country fit for the future.”
JLR CEO Adrian Mardell said: “The car industry is vital to the UK’s economic prosperity, sustaining 250,000 jobs. We warmly welcome this deal which secures greater certainty for our sector and the communities it supports. We would like to thank the UK and US governments for agreeing this deal at pace and look forward to continued engagement over the coming months.”
Great news for UK car industrySMMT chief executive Mike Hawes said: “The agreement announced yesterday to reduce tariffs on UK car exports into the USA is great news for the industry and consumers. The application of these tariffs was a severe and immediate threat to UK automotive exporters so this deal will provide much needed relief, allowing both the industry, and those that work in it, to approach the future more positively.
“The Government has recognised the importance of the automotive industry to UK exports and the wider economy and has worked quickly and tirelessly with US counterparts to strike an agreement. We hope that it will lead to broader and deeper cooperation that reduces barriers to trade still further, charting a path to economic growth for both nations.”
Stephen Morley, president of the Confederation of British Metalforming, a leading trade association for 200 UK manufacturers of fasteners, forgings and pressings, cold-rolled and sheet-metal products, said: “The Confederation of British Metalforming (CBM) welcomes the new US-UK trade agreement as a significant step forward for UK manufacturers, particularly those operating in the automotive, aerospace, steel and aluminium sectors. This deal provides much needed clarity and improved access to a critical market for CBM members, many of whom are world-class suppliers into transatlantic automotive and industrial supply chains.
“We remain committed to supporting our members as they take advantage of this agreement and urge continued cooperation between both governments to ensure regulatory alignment and simplified customs procedures that have been mentioned all progress smoothly and at pace. This is a positive signal for manufacturing at a time when confidence and international competitiveness are being tested by a wave of geopolitical pressures.”
Work will now continue on the remaining industrial sectors – such as pharmaceuticals and remaining reciprocal tariffs. But – in an important move – the US has agreed that the UK will get preferential treatment in any further tariffs imposed as part of Section 232 investigations. The deal opens the way to a future UK-US technology partnership through which our science-rich nations will collaborate in key areas of advanced technology, for example biotech, life sciences, quantum computing, nuclear fusion, aerospace and space.
The Digital Services Tax remains unchanged as part of today’s deal. Instead the two nations have agreed to work on a digital trade deal that will strip back paperwork for British firms trying to export to the USA – opening the UK up to a potentially huge market opportunity.