UK Manufacturers Celebrate Tariff Relief in New Trade Deal With the US

British manufacturers and exporters have expressed optimism following the announcement of a breakthrough trade deal between the United Kingdom and the United States. The agreement, confirmed on 8 May 2025, delivers significant tariff reductions on specific UK exports to the US, including cars, jet engines, and steel. This news has already sparked a positive reaction across the industry, with share prices of leading firms like Aston Martin and Rolls-Royce seeing notable gains.

The tariff on British car exports to the US has been cut to 10%, down from the previously crippling 27.5% introduced in March. However, the new rate remains higher than the 2.5% tariff that existed before Donald Trump’s presidency. The Society of Motor Manufacturers and Traders (SMMT) has welcomed the development, with its chief executive, Mike Hawes, describing it as “great news for the industry and consumers.” The change comes at a vital time, with UK car exports to the US reaching approximately 102,000 units last year. Concerns about imminent job cuts across the sector have now been alleviated, as the industry looks forward with increased confidence.

The UK steel sector has also applauded the deal, which eliminates the 25% tariff on steel exports. Gareth Stace, director general of UK Steel, labelled the move a “major relief”, adding that it would allow the embattled industry to resume trade with the US. Questions remain, however, about whether steel derivatives will still attract duties, and restrictions on the use of Chinese materials may potentially complicate the arrangement.

Rolls-Royce has emerged as one of the major beneficiaries of the new trade pact, as the deal exempts its jet engines used in Boeing 787 aircraft from tariffs. This exemption contributed to a 3.7% increase in Rolls-Royce’s share price on Thursday, while Boeing’s value also rose by 4% following announcements of a $10 billion (£7.5 billion) purchase of its planes by an unnamed UK company. Nevertheless, wider clarity on tariffs for other aerospace parts is still pending, leaving cautious optimism among industry players.

Responses from other sectors have been mixed. The Scotch whisky industry, a significant exporter to the US, still faces a 10% tariff, despite calls for the reintroduction of the zero-for-zero tariff agreement. Conversely, the British beer industry sharply criticised the UK government for an erroneous claim that tariff reductions on US ethanol would lower production costs for brewers. Industry representatives pointed out that ethanol is not part of the beer-making process, highlighting a need for greater governmental understanding of the sector.

This agreement marks a significant moment in UK-US trade relations. While it provides much-needed breathing room for some of the country’s key industries, it also underscores the importance of pursuing more comprehensive and favourable trade agreements to address remaining barriers and uncertainties.