At the G7 summit in Canada US president Donald Trump and UK prime minister Sir Keir Starmer have signed the tariff deal agreed last month.
The US-UK Economic Prosperity Deal means tariffs are now being reduced on a quota of UK cars entering the US, dropping from 25% to 10% for 100,000 vehicles, although hopes that a tariff on steel would be removed entirely have not materialised.
Steel questions remain
As reported by the BBC, when Trump was asked about a similar proposed quota for steel, he said “we're going to let you have that information in [a] little while”. In the meantime, steel and aluminium tariffs remain at 25% for UK exports to the US.
Trump has signed an executive order implementing the provisions of the deal that includes a note to say the US government “intends to promptly construct a quota at most-favoured-nation rates for steel and aluminium articles”. The UK government said it would “continue to go further and make progress towards 0% tariffs on core steel products as agreed”.
Pharma and aerospace
Also of note within the order is a commitment “to negotiate significantly preferential treatment outcomes on pharmaceuticals and pharmaceutical ingredients”. This is, however, “contingent on the findings of an investigation regarding pharmaceuticals and pharmaceutical ingredients” by the US, and requires that the UK “complies with certain supply chain security standards”.
Both countries are also to pursue a “structured, negotiated approach to addressing US national security concerns” in sectors that it may choose to investigate.
“To that end, the US and the UK further committed to strengthen aerospace and aircraft manufacturing supply chains by establishing tariff-free bilateral trade in certain aerospace products.”
Manufacturing report
The joint announcement between Trump and Starmer comes on the heels of a report by the UK’s major manufacturing association, Make UK, reviewing the sector’s outlook for the rest of the year.
For the first time in the quarterly report, the US “has dropped out of the top three growth markets for UK manufacturers” as “export optimism fades in the face of tariffs and rising uncertainty”. Six out of 10 companies queried as part of the report said they expected their exports to the US to fall in the coming months. Just 4% said they had plans to invest more in US-based manufacturing.
Seamus Nevin, Make UK chief economist, said that the UK’s manufacturers faced not only tariff trouble – what he called “a gathering storm of huge uncertainty in one of their major markets” – but also “a skills crisis”, as well as “eye-watering energy costs” that risked the country’s competitiveness. He added:
“It’s absolutely essential that the forthcoming industrial strategy takes bold measures to bring down the cost of energy and takes equally bold action to ensure companies can access the people they need to take advantage of a more competitive landscape.
“If these two issues are not addressed, then we will face the serious prospect of the UK accelerating into de-industrialisation.”
