Trump, Starmer Agree to Implement Tariff-Cutting Trade Deal
Prime Minister Keir Starmer reached an agreement with US President Donald Trump to implement some main elements of the trade deal announced last month to lower US tariffs on key British exports and raise UK quotas on certain American agricultural products.
Trump and Starmer on Monday presented a document signed at the Group of Seven meeting in Kananaskis, Canada, agreeing to move forward on measures easing trade of cars, agricultural and aerospace products. But it fell short of an immediate cut to steel tariffs, a key British priority.
“The UK is very well protected,” Trump told reporters. “Because I like them, that’s why, that’s their ultimate protection.”
Trump signed an executive order on Monday that also exempts the UK’s civil aerospace aircraft sector from Trump’s baseline 10% country-by-country tariffs, a significant relief for a sector closely intertwined with the US industry. UK auto exports will see US tariffs slashed to 10% from 27.5% later in June on an annual quota of 100,000 vehicles.
But there was no reprieve for the UK’s beleaguered steel sector, which had initially been promised a tariff reduction from the current 25% to zero. While the UK is currently the only country to avoid Trump’s 50% tariff on steel announced last month, British companies have still reported seeing their US orders dry up.
The US reiterated that it would exempt the UK up to a certain quota, but that has not yet been set because technical details have held up the negotiations. Commerce Secretary Howard Lutnick will determine that quota of products that can enter the US without being subject to the 25% tariffs, a White House official said.
The UK has committed to “working to meet American requirements on the security of the supply chains of steel and aluminum” including on the “nature of ownership” of relevant steel plants, according to the document. That confirms reports of US concerns about the foreign ownership of British Steel, which runs Britain’s last remaining blast furnaces that make steel from raw materials. While the UK government has taken effective control of the manufacturer, its legal owner remains China’s Jingye Group.
UK Business and Trade Secretary Jonathan Reynolds had previously told journalists in London last week that the ownership issue wasn’t the main stumbling block, saying it was more about the “melt and pour rules” covering where it is made.
Under previous trade agreements, the US has insisted that steel must be melted and poured in the UK. That requirement is becoming increasingly difficult to fulfill because British Steel is the only producer that still has blast furnaces, after Tata Steel UK closed its own down last year. Tata’s electric arc furnace is not due to be usable until late 2027.
Those melt and pour rules are still “part of the discussion that we’re having with them,” Reynolds said last Thursday, adding that he wanted to ensure the reduction to zero tariffs “is something that applies to every bit on the UK steel industry.”
In an awkward moment, the US president dropped part of the document as he opened a folder to show it to reporters. Starmer retrieved the pages from the ground, before Trump went on to erroneously describe it as a “trade agreement with the European Union,” the bloc which the UK left five years ago.
The deal is the first sealed by Trump following his decision to ratchet up tariffs against countries worldwide. While the US president has also secured a trade framework with China that lowered escalating tariffs, agreements with other trading partners have proved more elusive.
His administration will tout the UK agreement as a signal that his tariff war is bearing fruit, after winning UK concessions on agriculture. The pair agreed reciprocal access to 13,000 metric tonnes of beef for both US and British farmers, though the UK says any US imports will need to meet its food safety standards.
But market reaction was muted, as shares in British jet engine maker Rolls-Royce Plc slipped on Tuesday morning despite the signing of the deal, signaling worries about rising tensions in the Middle East.
For Starmer, sheltering key industries from more aggressive tariffs before other countries strike their own deals with the US is a vindication of his diplomatic approach refusing to overtly criticize Trump. But the absence of steel for now is a major blow, with a UK official saying tariffs remained at 25%, despite last month’s framework document laying out plans to drop them to zero.
Source : Reuters
