To reinforce post-Brexit trade ties, a groundbreaking tariff deal between the US and the UK took effect today (June 30, 2025). While this is a significant win for the auto and aerospace sectors, UK steel manufacturers are holding their breath for a signal of their fate.
/*Auto and Aerospace Takes Center Stage*/
Under the new agreement, UK-made cars such as iconic names including Mini, Aston Martin, Range Rover, and Jaguar Land Rover, and plane parts now only pay a 10 percent (down from 27.5 percent) tariff to be imported into the US. UK Trade Secretary Jonathan Reynolds described the change as "saving hundreds of millions each year" and safeguarding thousands of jobs. The deal caps 100000 cars annually at this reduced rate, and aerospace components are also free from tariffs, benefiting titans like Rolls Royce.
/*Steel and Aluminium: Waiting with Bated Breath*/
While the deal brings benefits in other sectors, steel and aluminium remain open to a 25 percent tariff and could face a 50 percent tariff if no agreement is reached by July 9. Industry officials, like Alasdair McDiarmid (assistant general secretary, Community union), highlighted it's "absolutely vital" for a zero tariff exemption. Firms like Marcegaglia UK are flagging massive cost uncertainties surrounding the impending deadline. Cabinet minister Jonathan Reynolds pledged further negotiating efforts to secure steel relief.
/*Timeline and Historical Context*/
The agreement follows talks initiated at April's G7 summit in Canada. President Donald Trump and UK Prime Minister Keir Starmer signed a framework agreement on June 16, which is awaiting final legal approval before official announcement. The US–UK arrangement mirrors the broader "reciprocal tariffs" under Trump's April "Liberation Day" proposal; initially suspended amid legal challenge, granting the UK special exemptions compared to other nations.
/*Wider Trade Shifts and Competitor Reactions*/
As a concession, the UK pledged its elimination of tariffs on US beef (raising imports' quota to approximately 13000 tonnes) and bioethanol. British farmers complained that hormone treated beef was being sold in the UK, so the government assured them through stringent certification levels. While proposals at home aim to shield the UK's steel from dumping by outsiders, reducing annual import quota increases from 3 percent to 0.1 percent to better protect local manufacturers.
/*Next Steps and Stakeholder Views*/
Trade Secretary Jonathan Reynolds spotted this agreement as the foundation for "deeper economic cooperation" and an example to follow in future trade deals. Analysts highlighted its narrow scope, noting that tariffs remain higher than they were in 2019 (approximately 11 percent) and it relies on future negotiations. With the July 9 steel deadline fast approaching, UK steelmakers are calling for urgent clarity to avoid potentially disastrous 50 percent tariffs.