Trump Unveils First Bilateral Tariff Deal With The U.K.

(MENAFN- The Rio Times) On May 8, 2025, the Bank of England's post-rate decision press conference coincided with news that the United States and United Kingdom would announce a new tariff agreement.

This deal follows months of rising trade friction after the US imposed a 10 percent tariff on all UK imports and a 25 percent tariff on UK steel, aluminum, vehicles, and auto parts.

The UK avoided even higher tariffs because it imports more from the US than it exports. However, British exporters have still faced steep costs, especially in the automotive and steel sectors.

The new agreement, expected to be outlined at the White House , aims to lower tariffs on some UK goods. Sources indicate that the US will reduce the 25 percent tariff on UK vehicles and steel for a set quota of exports.

The UK, in turn, will likely lower its own 10 percent tariff on US car imports. UK Chancellor Rachel Reeves has signaled openness to this reduction, though the final terms remain under negotiation.



The US has also pressed for the UK to repeal its 2 percent Digital Services Tax, which targets large American tech firms and generates about £800 million annually. US officials have long criticized this tax as unfair.
Trump Unveils First Bilateral Tariff Deal with the U.K.
Automobiles stand at the center of the deal. Last year, the UK exported about £9 billion in vehicles to the US. Industry leaders warn that the 25 percent tariff threatened up to 25,000 jobs, especially in regions dependent on car manufacturing.

UK carmakers like Jaguar Land Rover rely heavily on US sales. A quota system will likely allow a fixed number of UK vehicles into the US at a reduced tariff, with higher rates on any exports above that quota.

While this offers relief, manufacturers prefer universal tariff reductions, not quotas that could limit future growth.

Steel and aluminum also figure prominently. The UK exported around £700 million in steel and aluminum to the US last year.

The 25 percent tariffs have squeezed these industries, and representatives warn that failure to secure relief could lead to job losses and increased pressure from cheaper imports in other markets.

The deal is expected to lower tariffs for a certain volume of UK steel exports, but it remains unclear if aluminum will receive similar treatment.

Notably, the agreement does not cover agricultural products. The UK has refused to relax its food standards, including bans on hormone-treated beef and chlorinated chicken, despite US pressure.

This stance aligns with the UK's broader post-Brexit trade policy and domestic political concerns.

The deal's scope remains limited. It represents a framework or“head of terms,” not a comprehensive free trade agreement. Any broader deal would require approval from the US Congress, which is not expected soon.

For now, the agreement offers targeted relief for UK industries facing immediate threats, while leaving many issues unresolved.

Both sides will continue negotiations, but the outcome reflects the current realities of transatlantic trade: incremental progress, sector-by-sector bargaining, and persistent uncertainty for businesses on both sides.

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