On Thursday, President Donald Trump and British Prime Minister Keir Starmer announced a limited bilateral trade agreement that cuts U.S. tariffs on British cars and steel, expands agricultural market access for both countries, and maintains a 10% base tariff on most British exports.
The deal, described by both leaders as a “breakthrough,” reduces U.S. tariffs on British car imports from 27.5% to 10%, applying to a quota of 100,000 vehicles—nearly the total Britain exported to the U.S. last year. The U.S. will also eliminate 25% tariffs on UK steel and allow British aerospace firms to export plane parts duty-free. In return, a British airline is expected to purchase $10 billion in Boeing aircraft.
British farmers will gain a first-ever 13,000-metric-tonne, tariff-free beef export quota, while the UK will drop its 19% tariff on U.S. ethanol imports. However, UK food standards—such as the ban on hormone-treated beef—remain unchanged.
The agreement also ensures Britain will receive preferential treatment in future U.S. tariff actions under Section 232 national security probes. Talks on Trump’s proposal to impose new tariffs on film imports, including UK cinema, will be handled separately.
Despite the progress, major elements such as the UK’s digital services tax—levied at 2% of UK revenue for online platforms—remain unresolved. Talks will continue on sensitive sectors like pharmaceuticals and digital trade, with both sides expressing intent to build a broader agreement.
The U.S. Commerce Department projects the agreement could generate $5 billion annually in new American export opportunities and $6 billion in U.S. tariff revenue. Wall Street reacted positively, with the S&P 500 airline index closing up 5.4%, led by Delta Air Lines’ 7.2% gain following news that Rolls-Royce engines would enter the U.S. duty-free.
Overall, the deal follows Trump’s imposition of up to 50% tariffs on 57 trade partners in April, which were paused temporarily for negotiations until July 9. Though Trump rejected claims that the UK deal would serve as a template for others, his administration is preparing dozens of similar agreements, including high-stakes talks with China beginning this weekend in Switzerland.
