Economic deal with United States saves thousands of jobs for British car makers and steel industry

9th May 2025

Thousands of jobs have been saved as the Prime Minister secured a first-of-a-kind trade agreement with the US.

Britain secures the first US trade deal protecting British business and British jobs, the second landmark deal in Britain's national interest in a matter of days following the India deal.

Prime Minister delivers on his promise to save UK steel and British car makers - saving thousands of jobs across the country.

US tariffs on automotives immediately slashed from 27.5%, with steel and aluminium reduced to zero.

Unprecedented market access for British farmers with protections on food standards maintained.

Thousands of jobs have been saved as the Prime Minister secured a first-of-a-kind trade agreement with the US.

It is the second major trade announcement this week - following the India Free Trade Agreement on Tuesday, this historic agreement with the US to slash tariffs delivers for UK carmakers, steelworks and farmers - protecting jobs and providing stability for exporters.

Car export tariffs will reduce from 27.5% to 10% - saving hundreds of millions a year for Jaguar Land Rover alone. This will apply to a quota of 100,000 UK cars, almost the total the UK exported last year.

The Prime Minister visited Jaguar Land Rover last month announcing greater freedom for car manufacturers to back British industry in the face of global headwinds. During this visit he told workers he would accelerate trade deals to protect their jobs, their livelihoods, and to champion British business worldwide.

The UK steel industry - which was on the brink of collapse just weeks ago - will no longer face tariffs thanks to today's deal. The Prime Minister negotiated the 25% tariff down to zero, meaning UK steelmakers can carry on exporting to the US. This follows last month's intervention from the Prime Minister to take control of British Steel to save thousands of jobs in Scunthorpe.

In a win for both nations, we have agreed new reciprocal market access on beef - with UK farmers given a quota for 13,000 metric tonnes. There will be no weakening of UK food standards on imports.

We will also remove the tariff on ethanol – which is widely used in our manufacturing sector - coming into the UK from the US, down to zero.

It is one of many international deals that the Government is landing to boost our economy – following an Indian trade deal which will add £4.8 billion to the UK economy and £2.2 billion in wages every year.

Prime Minister, Keir Starmer, said:
The new global era demands a government that steps up, not stands aside.

This historic deal delivers for British business and British workers protecting thousands of British jobs in key sectors including car manufacturing and steel.

My government has put Britain at the front of the queue because we want to work constructively with allies for mutual benefit rather than turning our back on the world.

As VE Day reminds us, the UK has no greater ally than the United States, so I am delighted that eight decades on, under President Trump the special relationship remains a force for economic and national security.

This is jobs saved, jobs won but not job done and our teams will continue to work to build on this agreement.

My Government is determined to go further and faster to strengthen the UK's economy, putting more money in working people's pockets as part of our Plan for Change.

Business and Trade Secretary Jonathan Reynolds said:
I am delighted our calm approach and proactive engagement with the US has resulted in this deal which cuts tariffs for UK industry and cuts costs for businesses.

Businesses across the country will be glad to see our approach working, but this is only the beginning. We look forward to strengthening our trading relationship with the US through a wider economic deal, which will help us to deliver on our Plan for Change to provide economic stability and make this country fit for the future.

Adrian Mardell, Chief Executive Officer, JLR said:
The car industry is vital to the UK's economic prosperity, sustaining 250,000 jobs. We warmly welcome this deal which secures greater certainty for our sector and the communities it supports. We would like to thank the UK and US Governments for agreeing this deal at pace and look forward to continued engagement over the coming months.

Work will continue on the remaining sectors – such as pharmaceuticals and remaining reciprocal tariffs. But – in an important move – the US has agreed that the UK will get preferential treatment in any further tariffs imposed as part of Section 232 investigations. The deal opens the way to a future UK US technology partnership through which our science-rich nations will collaborate in key areas of advanced technology, for example biotech, life sciences, quantum computing, nuclear fusion, aerospace and space.

The Digital Services Tax remains unchanged as part of today’s deal. Instead the two nations have agreed to work on a digital trade deal that will strip back paperwork for British firms trying to export to the US – opening the UK up to a huge market that will put rocket boosters on the UK economy.

Key Details of the Agreement:

Automotive Sector: US tariffs on UK car exports will be substantially reduced. Reports indicate a cut from 27.5% to 10% for a quota of 100,000 vehicles annually. This is expected to provide a significant boost to UK car manufacturers.  

Steel and Aluminium: US tariffs on UK steel and aluminium will be reduced to zero. This move is aimed at supporting the UK's steel industry.  

Agriculture: The deal includes new reciprocal market access for beef, with UK farmers gaining a tariff-free quota of 13,000 metric tonnes to the US market, and US farmers gaining similar access to the UK. Notably, the agreement reportedly maintains UK food standards, meaning hormone-treated beef and chlorinated chicken will remain prohibited in the UK. The UK has also agreed to remove tariffs on US ethanol.
 
Aerospace: The US has reportedly agreed to drop tariffs on Rolls-Royce engines and other UK aircraft parts.
 
Reciprocal Tariffs: A general US tariff rate of 10% on many UK goods, imposed earlier by the Trump administration, is expected to remain in place for goods not covered by specific exemptions in this deal.

Digital Trade: Both nations have agreed to work on a separate digital trade deal aimed at reducing paperwork and streamlining processes for exporters.  

Pharmaceuticals: While specific details are still emerging, there's an indication that the UK has secured "preferential treatment" regarding potential future US import taxes on pharmaceuticals.  


Start Date:
Many of the tariff changes, particularly the reduction in automotive tariffs, are described as taking effect "immediately" or "as soon as possible." However, the full implementation timeline for all aspects of the agreement is still to be clarified. The deal is considered a "first step," with further negotiations anticipated on remaining tariffs and broader economic cooperation.

What's Not Fully Addressed:
The current agreement is not an all-encompassing free trade deal. Some sectors, like film and television, do not appear to have specific tariff relief included at this stage. The UK's Digital Services Tax on US tech firms also remains unchanged for now, with a commitment to work on a separate digital trade agreement.  

Both UK Prime Minister Keir Starmer and US President Donald Trump have hailed the deal as a positive development, emphasizing the strengthening of the "special relationship" and the economic benefits for both nations. However, some business groups and political commentators are calling for more comprehensive arrangements and clarity on the long-term trade relationship.

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Independent Newspaper 9 May 2025
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