London, July 1: British Prime Minister Keir Starmer on Monday welcomed the start of a new U.K.-U.S. trade agreement that slashes tariffs on automotive and aerospace exports, calling it a “historic” pact that will protect jobs and boost key industries.
The deal, which came into force on June 30, was finalised after talks between Starmer and U.S. President Donald Trump at the G7 Summit in Canada earlier this month. It marks the first such bilateral agreement between the U.S. and another country under the current U.S. administration.
Under the terms of the agreement, tariffs on British car exports to the United States have been reduced from 27.5% to 10%, while 10% tariffs on aerospace components, including engines and aircraft parts, have been scrapped entirely.
“Our historic trade deal with the United States delivers for British businesses and protects U.K. jobs,” Starmer said in a statement. “From today, our world-class automotive and aerospace industries will see tariffs slashed, safeguarding key industries that are vital to our economy.”
The government said the agreement is based on a quota system it describes as “simple, fair and effective,” and confirmed that Britain is the only country to have secured such terms with Washington. The U.K. also remains exempt from a global 50% tariff on steel and aluminium, and officials are continuing talks to achieve zero tariffs on core steel products.
Business and Trade Secretary Jonathan Reynolds, who led negotiations with the U.S., said the agreement demonstrated the government’s “Plan for Change” in action.
“We agreed this deal with the U.S. to protect jobs and support growth in some of our most vital sectors – and today, we’re delivering on that promise,” Reynolds said. “It’s a big win for industries like automotive and aerospace, where tariff cuts could save hundreds of millions of pounds annually.”
Industry leaders also welcomed the move. Mike Hawes, Chief Executive of the Society of Motor Manufacturers and Traders (SMMT), called the agreement a “diplomatic coup.”
“It immediately slashes the punitive tariffs that brought the U.S. export market to a standstill and threatened the viability of some of the most famous names in British manufacturing,” he said, citing the benefit for major exporters like Jaguar Land Rover.
The aerospace trade body ADS said the sector “hugely appreciated” the removal of tariffs, which would allow firms to focus on “innovation and excellence.” The government is expected to update Parliament in the coming days on the implementation of quotas for U.S. beef and ethanol imports, which were included in the final trade arrangement.
The U.K.-U.S. deal comes weeks after Britain announced a Free Trade Agreement with India on May 6, which is expected to be formally signed next month and projected to boost bilateral trade by GBP 25.5 billion annually over the next decade.
