Keir Starmer strikes ‘historic’ deal with US in bid to swerve tariffs
Keir Starmer has unveiled a new deal between the US and the UK, making Britain America’s first major trading partner to partially swerve the looming threat of tariffs.
US president Donald Trump last month unveiled sweeping tariffs on major economies across the world, including a 10 per cent tariff on goods imports from the UK and even larger tariffs on imports of vehicles, a move which sparked concerns among major manufacturers, especially carmakers.
But the new deal, which does not amount to a full free trade deal, will see a reduction in US barriers on UK agricultural, chemical, energy and industrial exports, such as on steel and aluminium, as well as increased market access for American exports, especially in agricultural products such as beef.
Tariffs on UK car exports will not be scrapped altogether but will be reduced from 27 to 10 per cent, Starmer said. But the baseline 10 per cent tariff on imports of several other products will remain. It was unclear whether British pharmaceutical companies would be exempt from tariffs, with Starmer insisting he would seek “preferential treatment” for pharma exports.
The precise terms of the agreement, which is yet to have been fully concluded, will be revealed in the coming days, the two leaders said.
Analysis: What is in the US-UK deal and what does it mean?
President Trump said in a call with Starmer: “This morning I’m thrilled to announce that we reached a trade deal with the United Kingdom.
“Today is a victory day for World War Two, we won the war together exactly 80 years ago so there could be no more appropriate day to reach this historic agreement.
“Today’s agreement with the UK is the first in the series of agreements on trade that my administration has been negotiating over the past four weeks.
“With this deal the UK joins the United States in affirming that reciprocity and fairness is an essential principle of international trade.”
Starmer added: “This is a fantastic historic day in which we can announce this deal between our two countries.
“This is going to boost trade across our countries. We’re sending a message to the world that Britain is open for business.”
Relief for carmakers
The agreement is likely to come as a relief for carmakers, several of whom including Land Rover maker JLR had paused exports to the US in the wake of fresh tariff threats from the White House.
The US is Britain’s second largest car export market after the EU, with more than 101,000 units shipped in 2024, representing 16.9 per cent of cars exported.
Shares in luxury carmaker Aston Martin rallied more than 10 per cent in late afternoon trading on news of the agreement.
Mike Hawes, chief executive of The Society of Motor Manufacturers & Traders, said: “The agreement announced today to reduce tariffs on UK car exports into the US is great news for the industry and consumers. The application of these tariffs was a severe and immediate threat to UK automotive exporters so this deal will provide much needed relief, allowing both the industry, and those that work in it, to approach the future more positively.
“Government has recognised the importance of the automotive industry to UK exports and the wider economy and has worked quickly and tirelessly with US counterparts to strike an agreement. We hope that it will lead to broader and deeper cooperation that reduces barriers to trade still further, charting a path to economic growth for both nations.”
‘It’s not historic’
Successive UK governments have been seeking to forge a trade deal with the US since Theresa May’s government kicked off talks in 2017 – again, with Trump in charge – though the deal gained little momentum in the latter half of Trump’s first term and flatlined under Biden.
While the deal unveiled today will allow the UK to escape tariffs on a number of key industries, a host of tariffs in other areas will remain unchanged.
Conservative leader Kemi Badenoch said: “When Labour negotiates, Britain loses. We cut our tariffs, America tripled theirs.
“Keir Starmer called this ‘historic’. It’s not historic, we’ve just been shafted!”
Aspects of a US trade deal have been variously controversial, from the prospect of chlorinated chicken on British shelves, to the implicit show of support for Trump.
The opposition Liberal Democrats have consistently called on the government to bring any deal before the House of Commons for a vote.
Two deals in one week
The deal is the second the UK government has secured with a major trading partner in the same week after Downing Street unveiled a new free trade agreement with India on Tuesday.
The deal, which the UK government said was the most “economically significant” free trade agreement signed since Brexit and the “best deal India has ever agreed”, is projected to be worth as much as £25.5bn in bilateral trade, adding £4.8bn to the UK economy.
The agreement will see a significant lowering of tariffs imposed by India on the UK, which the government said would “lock in” in reductions on 90 per cent of tariff lines, of which as much as 85 per cent become fully tariff-free within ten years. That would amount to India cutting tariffs worth £400m per year once the deal becomes law, and as much as £900m within a decade.
Whisky and gin tariffs will be halved from 150 per cent to 75 per cent, while automotive tariffs will be slashed from over 100 per to 10 per cent but will remain subject to a quota. The UK would also lower some tariffs it imposes on India including in areas like textiles.