U.K. PM Keir Starmer claims tariffs slashed as trade deal with U.S. takes effect

British car and aerospace manufacturers will benefit from slashed tariffs when exporting to America as the U.K.-U.S. trade deal comes into effect from Monday (June 30, 2025), Prime Minister Keir Starmer said as he welcomed the “historic” pact.

Downing Street claims the U.K. is the only country to have secured such a deal with U.S. President Donald Trump, reducing car export tariffs from 27.5% to 10% and the aerospace sector seeing the removal of 10% tariffs on goods such as engines and aircraft parts.

“Our historic trade deal with the United States delivers for British businesses and protects U.K. jobs,” said Mr. Starmer.

“From today, our world-class automotive and aerospace industries will see tariffs slashed, safeguarding key industries that are vital to our economy. We will always act in the national interest – backing British businesses and workers, delivering on our Plan for Change,” he said.

The deal, announced last month and discussed further between Mr. Starmer and Mr. Trump at the G7 Summit in Canada earlier this month, is built around a quota system which the U.K. government claims is “as simple, fair and effective as possible”.

The deal came soon after the India-U.K. Free Trade Agreement (FTA) was announced on May 6, which is now going through its legal document scrubbing to be formally signed by next month to boost bilateral trade by an estimated GBP 25.5 billion annually in the next decade.

“This is a clear example of our Plan for Change in action: cutting costs for businesses, speeding up delivery of trade benefits, and helping UK industries thrive in a challenging global environment,” said U.K. Business and Trade Secretary Jonathan Reynolds, leading on the trade talks with the U.S. and India.

“We agreed this deal with the U.S. to protect jobs and support growth in some of our most vital sectors – and today, we’re delivering on that promise for the UK’s world-class automotive and aerospace industries,” he said.

“British car manufacturers can now export to the U.S. at a significantly reduced 10% tariff rate – down from 27.5% – and aerospace goods will see 10% tariffs removed, saving sectors hundreds of millions each year and safeguarding thousands of jobs,” the Minister added.

The government reiterated that the deal makes the U.K. the only country to be exempt from the global tariff of 50% on steel and aluminium. As the Prime Minister and President Trump confirmed, the trade teams will continue to work towards 0% tariffs on core steel products as agreed, the U.K.’s Department for Business and Trade (DBT) stressed.

British industry welcomed the deal, with the aerospace group ADS saying the sector “hugely appreciated” relaxed tariffs on goods for it to continue to focus on “innovation and excellence”.

New trading agreement between the U.K. and U.S

“The implementation of the new trading agreement between the U.K. and U.S. is good news for US customers and a huge relief for the UK automotive companies that export to this critically important market,” said Mike Hawes, Chief Executive of the UK’s Society of Motor Manufacturers and Traders (SMMT) – representing the country’s auto companies including Indian-owned Tata Motors Jaguar Land Rover (JLR) brands.

“It immediately slashes the punitive tariffs that brought the U.S. export market to a standstill and threatened the viability of some of the most famous names in British manufacturing. Securing the deal – the first and, so far, only automotive deal in place with the administration – is a diplomatic coup and provides a foundation on which to grow trade in the future,” said Mr. Hawes.

The U.K. government is set to update Parliament on the implementation of quotas on U.S. beef and ethanol, as part of the commitment made to the U.S. under the trade deal.