UK-US Trade Deal Boosts UK Car Manufacturing and US Exports

The UK Government has announced a 'first-of-its-kind' trade agreement with the US - the second 'landmark' deal in a matter of days following the recent UK-India Free Trade Agreement.  

The UK–US trade deal marks a major step forward for UK manufacturing, easing trade restrictions and restoring tariff-free access to one of the UK’s most important export markets.

In particular, the agreement addresses key sectors including automotive, steel, aluminium, aerospace and electric vehicles (EVs), offering significant opportunities for UK manufacturers to expand their market share, rebuild previously disrupted supply chains and strengthen long-term competitiveness.

Tariff relief for UK car exports

Under the new deal, tariffs on UK-built cars exported to the US will fall from 27.5% to 10%, offering savings for manufacturers and greater stability for key global supply chains.

The agreement includes a quota of 100,000 vehicles, roughly equal to the UK's total car exports to the US last year - the figure will provide much needed predictability to car manufacturers under strain from recent tariff hikes. 

Jaguar Land Rover (JLR), for example, had halted some US shipments after tariffs were imposed in previous years. This agreement allows exports to resume with improved commercial viability, a move that will help UK-based OEMs compete more effectively in a high-value market.

JLR's Chief Executive Officer Adrian Mardell 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.”

UK Prime Minister Keir Starmer recently visited JLR and pledged support for British car makers. During the visit, Starmer told workers he would speed up trade agreements to safeguard employment and encourage investment in local manufacturing.

Speaking to workers, he promised to "Fight for the future. On defence spending, on AI, on clean British energy and on manufacturing, including car building."

As part of the deal, Rolls-Royce will also be allowed to export engines and aircraft parts to the US without tariffs, strengthening the aerospace sector’s international trade outlook.

The trade deal is reinforced by the UK’s agreement to purchase $10bn worth of Boeing aircraft, underlining mutual economic commitment.

Manufacturing at the heart of a new agreement

The deal was formally announced from the White House's Oval Office, with US President Donald Trump describing the UK as one of America’s “most cherished allies".

He outlined that the agreement would include US beef, ethanol and other farm goods, reduce non-tariff barriers and fast-track American goods through UK customs by cutting red tape.

“Furthermore, in a historic step, the deal includes plans that will bring the United Kingdom into the economic security alignment with the United States,” Trump said. “That's the first of its kind. So we have a big economic security blanket, and that's very important. And we feel very, very comfortable with that because it's been a great ally, truly one of our great allies.”

Following the announcement, 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.

Howard Lutnick, the US Commerce Secretary, confirmed that the deal includes a reduction in tariffs on UK cars from 25% to 10%, and reaffirmed that it allows for up to 100,000 UK cars per year under the revised rate. “We’ve opened up new market access, ethanol, beef machinery, all the agricultural products," he said.

"They've agreed to open their markets. And that will add US$5bn of opportunity to American exporters. We still have our 10% tariff on which will produce US$6bn of revenue for the United States.”

Industry stability under new deal

The deal brings some respite to UK industry following a period of uncertainty after President Trump’s 2 April announcement of increased tariffs across global trade. 

With retaliatory tariffs reaching 145% from the US and 125% from China, trade tensions have strained international industries and their supply chains. The US and China have planned high-level discussions in Switzerland to address these challenges.

Jonathan Reynolds, Business and Trade Secretary, 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.”

Bank of England Governor Andrew Bailey said during a press conference: “It will help to reduce uncertainty. The UK is, though, a very open economy and is affected by the tariffs affecting other economies. I say that because I hope the UK agreement, if it is the case this afternoon, is the first of many. It is excellent that the UK is leading the way and I do congratulate all those involved.”

Starmer, highlighting the importance of reaching a trade agreement between the UK and the US, said: “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.”

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