US-UK Trade Deal Brings Automotive Relief and New Tariff Quotas, but Baseline Taxes Remain Challenging for British Exporters Podcast Por arte de portada

US-UK Trade Deal Brings Automotive Relief and New Tariff Quotas, but Baseline Taxes Remain Challenging for British Exporters

US-UK Trade Deal Brings Automotive Relief and New Tariff Quotas, but Baseline Taxes Remain Challenging for British Exporters

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 Listeners, welcome to United Kingdom Tariff News and Tracker for Friday, June 20, 2025.

The past several weeks have brought major developments in tariffs and trade relations between the United States and the United Kingdom, shaped by President Trump’s tariff agenda and the new Economic Prosperity Deal announced this May. Here’s what matters most for the UK and its exporters.

According to the White House, beginning May 8, an annual quota now allows up to 100,000 UK-produced vehicles into the US at a 10% tariff rate—down from the 25% previously imposed on autos under Section 232. This closely matches UK car exports to the US in 2024, providing vital relief for Britain’s automotive sector. The US has also committed to constructing quotas for UK steel and aluminum at most-favored-nation rates, provided Britain meets American requirements around supply chain security and ownership standards for these industries.

The deal is not yet fully formalized and currently operates under general terms while negotiations continue. The US-UK Economic Prosperity Deal also promises sector-specific tariff reductions. For UK aerospace, the US has agreed to zero tariffs on certain aircraft and aerospace products, clearing the way for major purchases—including London’s recent £8 billion agreement to buy US-made airplanes, while Rolls-Royce engines will enter the US duty-free. The agreement includes preferential treatment for UK pharmaceuticals and ingredients contingent upon meeting new American standards.

Despite these breakthroughs, the Trump administration’s 10% “universal baseline” tariff remains in place for virtually all UK imports into the US. For steel, aluminum, and automobiles that exceed the new quotas, a 25% tariff will still apply. These tariffs, set to rise for some sectors, contribute to an average effective US tariff rate of 15.8%, the highest since 1936. According to The Budget Lab at Yale, these higher tariffs are already raising household costs, with clothing and shoes facing especially steep increases in prices.

On UK beef and ethanol, the United Kingdom has agreed to remove its 20% retaliatory tariff, opening a new, quota-based, tariff-free window for US beef exports and up to 1.4 billion liters of US ethanol to enter duty-free. However, any US ethanol imports above that quota face UK tariffs ranging from 10% to 50%.

One ongoing point of contention is the UK’s 2% digital services tax on large US tech companies, which the Trump administration calls discriminatory. The tax survives for now, and both governments signaled that further negotiation will be needed.

To sum up, while new quotas and tariff preferences represent progress, the 10% US baseline tariff on UK goods continues to weigh on British exporters. Businesses remain keenly interested in when and how a formal, binding deal will be achieved. As these negotiations continue and new announcements emerge, listeners can count on us to keep tracking every headline and update.

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