UK-US Trade Deal Progress: Steel Tariffs Unresolved
New UK Prime Minister Keir Starmer indicates progress in UK-US trade negotiations regarding important industries, but the issue of steel tariffs is still unresolved.
Summary:
The UK and the United States have reportedly reached an agreement on a long-anticipated trade deal, with UK Prime Minister Sir Keir Starmer indicating that significant aspects related to the automotive and aerospace sectors are complete. However, tariff issues—particularly concerning steel—are still under negotiation. The development signals renewed economic cooperation between the two allies, though lingering trade barriers continue to pose challenges.
In a significant development for post-Brexit trade relations, UK Prime Minister Sir Keir Starmer confirmed that a UK-US trade agreement is “done”, albeit with key details—most notably, tariffs on UK steel exports to the US—still being ironed out. Starmer’s announcement has raised optimism for a new chapter in transatlantic commerce, even as it highlights the complexities that remain in sensitive industrial areas.
The announcement came during Starmer’s first overseas trip as Prime Minister, where he met with US President Joe Biden and other global leaders at the NATO summit in Washington D.C. While the overarching framework of the trade agreement appears to be settled, Starmer acknowledged that “some technical elements, particularly around steel tariffs,” require further negotiation.
Breakthrough in Autos and Aerospace
Speaking to reporters, Starmer hinted that automotive and aerospace-related trade matters, which had been under prolonged discussion since the Trump administration, have been finalized. These sectors are critical for the UK’s industrial economy, particularly given their export orientation and role in sustaining thousands of skilled jobs across the Midlands and the North of England.
In particular, the agreement is expected to ensure tariff-free access for UK car manufacturers and aerospace component suppliers while also paving the way for enhanced regulatory cooperation on safety standards, emissions, and certifications. This is a vital win for UK-based companies such as Jaguar Land Rover, Rolls-Royce, and BAE Systems, which rely heavily on exports to North America.
“Securing agreement on these sectors has been a major priority,” said a senior UK government trade official, “especially as the UK shifts focus towards high-tech, low-carbon manufacturing. This will help British industries compete on a more level playing field.”
Steel Tariffs Still a Sticking Point
Despite the progress, tariffs on UK steel and aluminium exports to the US, imposed initially under former President Donald Trump in 2018 under Section 232, remain unresolved. While the EU successfully negotiated the removal of similar tariffs in 2021 under the Biden administration, the UK—operating independently post-Brexit—has faced a more complex path.
Currently, UK steel exports to the US are subject to 25% tariffs, making them less competitive and putting pressure on a sector already dealing with high energy costs and global overcapacity. British Steel and Tata Steel, two major producers in the UK, have consistently advocated for tariff relief, cautioning that ongoing trade restrictions might jeopardize both investments and employment.
“We welcome progress in other areas, but the steel issue is absolutely critical,” said Gareth Stace, Director General of UK Steel. “Without lifting these tariffs, we remain at a disadvantage in a key export market.”
Analysts suggest that while the broad contours of the UK-US trade pact are settled, the Biden administration is treading carefully on steel due to domestic political sensitivities, particularly in Rust Belt states like Pennsylvania and Ohio ahead of the US elections.
Political and Economic Implications
For Prime Minister Starmer, who took office with a focus on economic stability and international collaboration, concluding the UK-US trade agreement marks a notable diplomatic success. It offers early validation of his “Britain Reconnected” foreign policy, aimed at mending international ties and restoring trust among allies strained during the post-Brexit and Johnson years.
The deal also signals a strategic recalibration of UK trade policy, moving away from bombastic free trade rhetoric toward more targeted, sectoral agreements with major economies.
For the United States, the agreement reinforces its trade relationship with a key NATO ally amid growing global instability and competition from China. Although not a full-fledged Free Trade Agreement (FTA), the deal could serve as a framework for future cooperation, including in green technology, defence, and digital services.
Industry Reaction: Cautious Optimism
Industry bodies on both sides of the Atlantic responded to the announcement with measured enthusiasm. The Confederation of British Industry (CBI) welcomed the finalization of key sector agreements, calling it “a step in the right direction.” However, it also urged the government to press for early resolution of unresolved tariff issues.
Meanwhile, US Chamber of Commerce representatives indicated that American firms are eager to tap into Britain’s evolving green economy and digital innovation landscape, especially given regulatory clarity under the new UK administration.
“Both sides benefit when trade is open, fair, and rules-based,” said a Chamber spokesperson. “The UK remains a top investment destination for U.S. firms, and this agreement provides renewed momentum.”
Next Steps: Ratification and Implementation
While the deal has been declared “done,” its formal ratification process remains underway. UK officials will soon present the final documents to Parliament, and public consultations are expected. On the US side, any significant changes involving tariffs or regulatory standards may require Congressional review, depending on the deal’s structure.
Additionally, ongoing discussions on climate cooperation, digital trade, and AI standards are expected to be added to the UK-US trade agenda later this year.
Conclusion
The UK and the United States have reached a landmark point in trade negotiations, with key progress in the automotive and aerospace sectors. However, tariffs on UK steel and aluminium exports remain unresolved, indicating that while the trade deal is “done” in spirit, its full benefits are yet to materialize. Still, the announcement marks a turning point in post-Brexit UK foreign trade policy and offers renewed hope for a broader, more inclusive economic partnership between the two allies.
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