Early evening summary
Donald Trump and Keir Starmer have announced a “breakthrough” trade deal that is expected to slash US tariffs on cars, aluminium and steel. The UK government has published its summary of the deal here and the White House has provided its summary of the deal here. At a briefing for journalists in Westminster, Jonathan Reynolds, the business secretary, said the deal would safeguard thousands of British jobs, particularly in the automative sector. He said:
It is important to remember there are two parts to the US tariff agenda. There’s the sectoral tariffs that have been announced, automotive being a good example of those. And then there is the reciprocal tariff figure, the 10% you will be familiar with.
So this landmark breakthrough today agrees general terms to set out the process by which we will agree the detail on the tariffs in relation to those reciprocal tariffs – that negotiation about the 10%.
But it provides immediate changes and movement on the sectal tariffs.
So specifically, the automotive tariff, which was effectively 27.5% – 25% plus the 2.5% which is the MFN [most favoured nation[ tariff for the US – will be reduced to 10% for a quota of 100,000 vehicles a year being exported from the UK to the US. That is broadly the current level of UK automotive exports to the US.
On steel and aluminium and derivatives, which again had been set at 25%, that will be reduced to 0% …
In exchange for that, we have agreed provisions with the US, specifically on beef, ethanol and on economic security.
So in relation to beef, the US currently shares a quota of 1,000 metric tonnes alongside Canada. Canada accesses that at a 0% tariff, the US at a 20% tariff. That will be reduced to the US, comparable to Canada, to 0%. And in addition there will be an additional quota for the US of 13,000 metric tonnes created at a 0% tariff.
By way of comparison, when the former Conservative government agreed the Australia trade deal that was for a quota for 35,000 metric tonnes, which rises to 110,000 metric tonnes over time. If that quota were filled, that bigger quarter from the US to the UK, that would amount to broadly 1.5% of the UK beef market.
Crucially, that is SPS [sanitary and phytosanitary] compliant beef. That is beef that meets our existing SPS standards, And it is reciprocal, so we gain the same from the US as we are giving to them in the UK.
On ethanol, there is currently no tariff-free quota for US exports to the UK, it’s subject to a tariff graduating from 10 to 50%, it depends on how you use the ethanol, whether you are using it for fuel or food. There will be a new tariff free quota of 1.4bn litres for the US. Last year, US ethanol exports to the UK amounted to 860,000bn litres. So that is beef and ethanol in relation to the provisions around economic security.
But, at a news conference, Keir Starmer would not deny that, even with the deal, the UK remains worse off than it was before President Trump imposed his global tariffs. (See 4.33pm.) Kemi Badenoch, the Tory leader, said the UK had been “shafted”. (See 5.03pm.)
There is ongoing coverage on our US live blog.
For a full list of all the stories covered here today, scroll through the key events timeline at the top of the blog.
Here is some more comment on the deal from trade specialists.
From Liam Byrne, the Labour chair of the Commons business committee
At first blush, it looks like the UK has stolen first-mover advantage and delivered the big win-win in #TrumpTariffTalks – complete with long-term guarantees.
A modest retreat on agriculture has unlocked a major reprieve for tens of thousands of jobs in the UK’s car and steel industries, in a deal that does not compromise our ability to pursue a big, bold reset with the European Union on 19 May. The transatlantic alliance has been strengthened— and not at the expense of our cross-Channel possibilities.
There is one major disadvantage, the 10% general tariff remains – but its removal was always a long shot with this administration.
From John Denton, secretary general of the International Chamber of Commerce, a global business organisation
Today’s agreement is a welcome signal that the US administration is serious about engaging with its trade partners and striking new deals.
While the deal offers some strategically important relief for British manufacturers, the reality is that U.S. tariffs on UK exports remain significantly higher than they were at the start of the year. It also remains unclear how this agreement will sit alongside any future sector-specific tariffs – in areas such as pharmaceuticals – which risks clouding long-term confidence in transatlantic trade relations.
More broadly, today’s deal seems to confirm that – even with a series of bilateral agreements – the world economy is facing the steepest rise in U.S. tariff levels since the 1930s. This remains, to be clear, a significant downside risk to business investment and global growth.
From Marley Morris, a trade specialist at the IPPR, a left-leaning thinktank
Today’s deal is the second big win for UK trade this week. The government managed to negotiate lower tariffs on steel and cars exported to the US, while maintaining clear red lines on food standards.
Contrary to expectations, there was also no change to the UK’s digital services tax. Instead, the government compromised by agreeing tariff reductions on items like beef and ethanol.
The deal does not remove Trump’s 10% universal tariff, but this was always unlikely. In an exceptionally unpredictable global trading environment, the government has played its hand well.
From Prof Emily Jones, a trade specialist at Oxford University’s Blavatnik School of Government
This deal looks like a skilful piece of negotiation from Keir Starmer and his team.
While we are still worse off overall than we were a year ago, and subject to 10% tariffs in most areas, the sky-high tariffs applied to the steel and car industry have been reduced.
In return the UK seems to have made some modest concessions, including opening up its market to some more beef and ethanol.
The UK has done well to keep further tax breaks for US tech giants off the table but there is a big question mark over whether this and other concessions will be part of the future technology partnership.
