LONDON – Starting Monday, the newly established U.K.-U.S. trade agreement will initiate preferential tariff rates for British cars entering the American market, although uncertainties regarding eventual tariffs on the U.K.’s metal exports remain unresolved.
This agreement marks a significant development, as in May, the U.K. became the first nation to forge a trade deal with the U.S. following the introduction of reciprocal tariffs by the Trump administration just a month earlier. The provisions of the deal took effect on June 30.
The terms of the deal impose a streamlined blanket 10% tariff on all U.K. goods imported into the United States.
Additionally, the first 100,000 cars exported annually from the U.K. to the U.S. will also incur a 10% tariff. Beyond this threshold, any additional vehicles will attract a 25% import duty.
Data from the Society of Motor Manufacturers and Traders (SMMT) indicates that approximately 102,000 vehicles produced in the U.K. were exported to the U.S. last year.
Currently, the U.S. maintains a trade surplus with Britain, exporting more goods than it imports from the country. Cars represent the largest category of U.K. exports to the United States, with the U.S. being the primary global buyer of British vehicles. In the previous year, 27.4% of the U.K.’s car exports were sent to the American market.
The newly established 10-25% tariff range significantly reduces the former 50% tariff traditionally applied to vehicles imported from other countries.
The trade agreement also eliminates tariffs on aerospace exports from the U.K. to the U.S.
However, discussions continue regarding the reduction of tariffs on essential industrial metals.
Although the U.K. is currently the only country enjoying a preferential 25% tariff on its steel and aluminum exports to the U.S., compared to 50% applied to other trading partners, both nations are in talks to potentially lower tariffs on British steel to 0%. The U.S. is the fourth-largest export destination for British iron and steel.
On Monday, the U.K. government affirmed that “we will continue to make strides toward achieving 0% tariffs on core steel products as committed.”
During official remarks on Monday, Prime Minister Keir Starmer described the agreement as “historic,” highlighting its role in protecting crucial industries essential to the economy and safeguarding jobs.
Mike Hawes, CEO of the SMMT, expressed relief at the agreement, stating that it “is a tremendous boost for U.K. automotive firms exporting to this vital market.”
According to him, the deal “dramatically reduces the burdensome tariffs that previously brought the U.S. export market to a halt and jeopardized the future of some of Britain’s most renowned manufacturing names.”
