UK aerospace sector to avoid tariffs as Trump-Starmer trade deal clinched
Prime Minister Keir Starmer and President Donald Trump met on the sidelines of the G7 summit to agree a trade deal that will remove tariffs on the UK aerospace sector and save carmakers from facing aggressive taxes on exports.
The pair of world leaders heaped praise on one another while the UK government said the likes of Rolls Royce were set for a “huge win” while car manufacturers could “breathe a sigh of relief”.
During the brief meeting in Western Canada, Trump claimed Starmer had “done what they haven’t been able to do” after years of post-Brexit negotiations.
“The UK is very well protected. You know why? Because I like them – that’s their ultimate protection,” Trump told reporters.
“The prime minister has done a great job. I want to just tell that to the people of the United Kingdom. He’s done a very, very good job.”
It was also revealed that the UK would continue to avoid 50 per cent tariffs on steel but a full tariff reduction has not yet been agreed as previously assured.
In early May, the government declared:
“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.”
The UK will face a ten per cent tariff rate on a quota of car exports to the US, dodging a 27.5 per cent hit taken by other countries.
The Office for National Statistics (ONS) last week said monthly trade data for UK exports to the US had seen the sharpest drop since records began as the UK’s total trade deficit with the world’s largest economy grew.
Trade deal hailed
Business and trade secretary Jonathan Reynolds hailed the deal as a lifeline for UK workers amid intensified global tensions.
“We agreed this deal with the US to ensure jobs and livelihoods in some of our most vital sectors were protected, and since then we have been focused on delivering those benefits to businesses,” Reynolds said.
“Bringing trade deals into force can take several months, yet we are delivering on the first set of agreements in a matter of weeks.”
The UK and US will also have reciprocal acciss to 13,000 metric tonnes of beef, an agreement that has received mixed reactions as the National Farmers Union suggests the inclusion of bioethanol in deals would put British farmers’ profit margins under risk.
While the deal is seen as vital in removing tariffs by various business groups, exporters in the UK car industry and other sectors face higher tariffs than before Trump’s taxes on goods were first announced.
A baseline ten per cent tariff on all other goods imported to the US could still come into effect in around a month.
But Trump hinted at more trade deals being agreed, including with the European Union.
Economists have suggested that the UK will stand to suffer from trade turmoil regardless of its latest trade deal, with all eyes on how Starmer’s European counterparts find an agreement with Trump.