Can a single trade deal reshape economies and protect jobs? At the 2025 G7 summit in Kananaskis, Alberta, U.S. President Donald Trump and British Prime Minister Keir Starmer signed a landmark agreement to cut tariffs on UK auto and aerospace imports. While the deal promises economic boosts, steel tariffs remain unresolved. Here’s what you need to know about this pivotal pact and its impact.
1. A Historic Trade Pact Unveiled
On June 16, 2025, Trump and Starmer announced the deal to reporters, with Trump waving the agreement papers—despite a brief mix-up where he mentioned the EU instead of the UK. Calling it “a fair deal for both,” Trump highlighted its potential to “create jobs and income.” Starmer echoed the optimism, labeling it “a very good day” for both nations’ economic strength.
The agreement builds on a May 2025 framework to reduce U.S. tariffs on British cars, steel, and aluminum while opening UK markets to American beef and ethanol. However, only autos and aerospace are fully covered, with steel still under negotiation.
Quick Fact: The deal exempts the UK from a 10% U.S. tariff levy planned for other countries.
2. Boost for UK Autos and Aerospace
The deal delivers significant wins for British industries:
- Autos: U.S. tariffs on UK cars drop from 27.5% to 10% starting late June 2025, for up to 100,000 vehicles annually. This benefits UK automakers and supports jobs.
- Aerospace: U.S. tariffs on UK aerospace products, like Rolls-Royce engines, are eliminated, giving firms a competitive edge.
UK Business and Trade Secretary Jonathan Reynolds said the deal safeguards “jobs and livelihoods in vital sectors.” Mike Hawes of the Society of Motor Manufacturers and Traders called it “great news” for the UK auto industry.
3. Steel Tariffs: Still Up in the Air
Despite hopes for zero tariffs on UK steel, no final agreement was reached—a blow to Britain’s struggling steel sector, down 80% since the 1960s due to high costs and Chinese competition. The UK government insists “0% tariffs on core steel products” remain the goal. Meanwhile, U.S. Commerce Secretary Howard Lutnick will set a quota for tariff-free UK steel and aluminum imports.
Trump’s earlier decision to double global metals tariffs to 50% (later clarified as 25% for the UK) caught British businesses off guard, underscoring the urgency of a steel deal.
4. What’s in It for the U.S.?
American farmers gain access to export 13,000 metric tons of beef annually to the UK, though a British ban on hormone-treated beef persists. The deal also emphasizes secure supply chains, with the UK committing to meet U.S. standards for steel and aluminum exports, addressing concerns about Chinese influence.
Negotiations on pharmaceuticals continue, with no timeline for resolution.
5. Why This Deal Matters
Amid Trump’s threats of steep global tariffs, the US-UK pact signals a commitment to trade stability, especially for the UK, which Trump said is “well protected” due to his personal affinity. For consumers, lower tariffs could mean cheaper British cars and aerospace products, while boosting jobs on both sides of the Atlantic. But with steel unresolved, will markets stay calm?
How will this deal shape global trade? Share your thoughts below!
Explore More: How Trump’s 2025 trade policies are reshaping markets.
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