Trump Signs Trade Deal Lowering Tariffs on British Cars

President Donald Trump has signed an executive order bringing into force parts of a trade agreement with the United Kingdom, reducing tariffs on British cars entering the United States and marking the first such deal since Trump imposed wide-ranging import taxes earlier this year.

The agreement, initially negotiated last month, will allow up to 100,000 UK cars to enter the US at a 10% tariff rate instead of the 25% import tax imposed on all car imports. Speaking at the G7 summit in Canada, Prime Minister Sir Keir Starmer called it a “very important day” for both countries.

Under the terms of the order signed Monday, the US will establish a similar quota system for steel and aluminum imports, though specific details were not immediately provided. When asked about steel tariffs, Trump said the UK was “very well protected” adding, “You know why? Because I like them.”

The deal represents a partial shield for British businesses from Trump’s broader tariff regime, which has sparked financial turmoil and alarm worldwide. UK car manufacturers and steelmakers, who rely heavily on the US market, had been particularly concerned about the impact of the 25% tariffs.

Mike Hawes, head of the Society of Motor Manufacturers and Traders, called the agreement “a huge reassurance” to the UK automotive sector. He noted that the 10% tariff gives UK manufacturers “something of a competitive edge” over competitors from Italy and Germany who remain subject to the full 27.5% tariff.

JLR, the UK carmaker owned by India’s Tata Motors, had already lowered its earnings forecast after pausing shipments to the US in April due to tariff concerns, highlighting the real economic impact of the trade dispute.

The agreement also includes provisions for aerospace products, with certain tariffs to be removed entirely. Additionally, the UK has granted a tariff-free quota of 1.4 billion liters of US ethanol and will scrap a 20% tariff on US beef imports, raising the quota to 13,000 tonnes.

However, critical issues remain unresolved. The UK government said it would “continue to go further and make progress towards 0% tariffs on core steel products as agreed,” with a July 9 deadline looming for reaching an agreement to avoid a potential doubling of steel tariffs to 50%.

Transport Secretary Heidi Alexander acknowledged “we’ve still got some more work to do,” particularly regarding technical details around steel imports and the “melted and poured” requirement that affects UK steelmakers transitioning to electric furnace production.

While ministers have hailed the agreement alongside potential trade deals with the European Union and India, critics note it falls far short of the comprehensive free-trade agreement long discussed between the UK and US. Conservative leader Kemi Badenoch dismissed it as a “tiny tariff deal,” while Liberal Democrats called for transparency on its impact on British farmers and food standards.

The deal will take effect seven days following its official publication, offering some relief to UK exporters while highlighting the complex negotiations still ahead in the post-Brexit trade landscape.

This story draws on reporting by Natalie Sherman and Chris Mason for the BBC.