President Donald Trump signed an executive order on Monday enacting key elements of a UK-US tariff agreement, clearing the way for reduced tariffs on certain British goods, particularly in the automotive sector.
The order, signed during the G7 summit in Canada, marks the first tangible step in implementing parts of a pact initially agreed upon last month, as both governments scrambled to shield businesses from escalating trade costs amid broader economic uncertainty.
A Limited Deal with Strategic Importance
While the deal does not constitute a full free trade agreement, it includes targeted tariff reductions that will provide immediate relief to key UK export industries—most notably cars, beef, ethanol, and aerospace products.
Under the deal:
- Up to 100,000 UK-made cars will now face a 10% tariff, down from the punitive 25% rate imposed earlier this year.
- The UK will increase the quota for US beef imports to 13,000 tonnes, while dropping the existing 20% tariff.
- 1.4 billion litres of US ethanol will enter the UK tariff-free, a move met with resistance from domestic producers.
- Certain aerospace tariffs will also be removed.
Trump described the agreement as evidence that the UK was “very well protected,” stating bluntly, “You know why? Because I like them.”
Automotive Industry Breathes a Sigh of Relief
The UK’s car manufacturers were among the hardest hit by Trump’s tariff announcements earlier this year. Without a deal, British-made cars faced a staggering 27.5% combined tariff to enter the US market, including the base 2.5% and an additional 25% penalty.
Mike Hawes, Chief Executive of the Society of Motor Manufacturers and Traders (SMMT), welcomed the agreement, calling it a “huge reassurance” for the sector.
“The 10% cap offers a competitive edge,” said Hawes, noting that UK car exports will now fare better than European competitors, such as Germany and Italy, still facing the full tariff.
Car giant Jaguar Land Rover (JLR), which paused US-bound shipments in April due to uncertainty, also adjusted its earnings forecast on Monday, citing optimism from the signed order.
Steel and Aluminium Still in Limbo
Despite earlier promises, the order left UK steel and aluminium producers without clarity. The current 25% tariffs remain in place, although Trump said a “similar system” would soon be applied, without elaborating.
This vagueness is a point of contention. UK steel firms are demanding details about tariff exemptions, especially as Trump threatens to double steel tariffs to 50% unless a deal is finalized by July 9.
Gareth Stace, Director of UK Steel, voiced deep concerns:
“The industry urgently needs clarification around the ‘melted and poured’ rule and quota levels. Without it, thousands of jobs are at risk.”
Transport Secretary Heidi Alexander admitted negotiations were still ongoing:
“There’s more work to do. We’re trying to reduce the 25% tariff through technical negotiations.”
The situation is further complicated by the transition of Tata Steel’s UK operations, which recently shut down its blast furnaces and now relies on imported steel—a potential disqualifier for US tariff exemptions under “melted and poured” requirements.
Domestic Tensions Over Bioethanol Concessions
The UK’s agreement to grant US producers tariff-free access for 1.4 billion litres of ethanol has alarmed domestic producers, especially ABF Sugar, which operates Britain’s largest bioethanol plant.
Paul Kenward, CEO of ABF Sugar, warned of potential job losses:
“The government has handed over the UK ethanol market. If there’s no state support by June 25, we’ll begin consultations that could affect 200 jobs at our Hull plant.”
Political Backdrop and Public Response
Prime Minister Sir Keir Starmer hailed the agreement as a “sign of strength” in the UK-US relationship, emphasizing its importance for post-Brexit trade resilience. However, critics argue the deal falls short of expectations.
The Conservative Party leader Kemi Badenoch dismissed it as a “tiny tariff deal,” while the Liberal Democrats’ Daisy Cooper demanded transparency:
“The government must publish impact assessments—especially on how this affects farmers, steelmakers, and food safety standards.”
While the government insists US food imports will meet existing UK safety standards, the increased beef quota and bioethanol deal have reignited debates over domestic protections and long-term food sovereignty.
Not a Full Trade Agreement
Despite Trump’s characterization of the deal as a “major trade deal,” the agreement lacks the scope and legal foundation of a formal free trade pact. Under US law, only Congress can authorize full trade agreements—a step this order does not fulfill.
Business Secretary Jonathan Reynolds acknowledged the deal’s limited scope but praised the progress:
“It’s a step in the right direction, but we remain committed to securing zero tariffs on core steel and other sectors.”
What Comes Next?
The agreement will take effect seven days after publication, bringing long-awaited tariff relief to some sectors while leaving others in limbo. As industries adjust, the UK government faces increasing pressure to:
- Finalize steel tariff reforms
- Protect domestic bioethanol production
- Publish full economic impact reports
For now, carmakers and aerospace firms may celebrate, but the broader message from trade analysts is one of cautious optimism. The deal is a diplomatic win, but far from the sweeping US-UK trade pact once envisioned.
Written By Joe Brens
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