US-UK announce trade deal to open up markets for chemicals, ethanol, agriculture, autos, steel and aluminium, aircraft

NEW YORK (ICIS)–The US and UK announced the first trade deal since the US 2 April ‘Liberation Day’ tariffs which would open up UK market access for US chemicals, machinery, beef, ethanol and other agricultural products, government officials said.

The deal also opens up US market access for UK autos, steel and aluminium, and beef.

US President Donald Trump and UK Prime Minister Keir Starmer announced the deal in a press conference on the 8 May. While the deal will be finalized in the coming weeks with full details, officials revealed certain aspects of the agreement.

Trump and Starmer spoke on the phone in front of the press, and then each ran separate press conferences.

US tariffs of 10% on UK imports will remain in place but sectoral auto tariffs will fall from 25% to 10% for UK vehicles, as stated in the US press conference. There was an existing US tariff of 2.5% for imported vehicles prior to the sectoral tariffs, but the final auto tariff level for the UK would be 10%.

This would apply to a quota of the first 100,000 cars, almost the total the UK exported in 2024, according to the UK government.

The US reciprocal tariffs revealed on 2 April included the minimum 10% level for the UK where the US runs a goods trade surplus.

In 2024, the US exported $79.9 billion in goods to the UK and imported $68.1 billion in goods for a trade surplus of $11.8 billion, according to the US Trade Representative.

US sectoral tariffs of 25% on steel and aluminium would be slashed to zero for imports from the UK, as indicated in the UK press conference.

UK Rolls Royce aircraft engines and other aircraft parts would also face no US tariff.

The opening up of new markets to US exports would add, “$5 billion of opportunity”, for US exporters, US Commerce Secretary Howard Lutnick said.

“Work will continue on the remaining sectors – such as pharmaceuticals and remaining reciprocal tariffs. But – in an important move – the US has agreed that the UK will get preferential treatment in any further tariffs imposed as part of Section 232 investigations,” said the UK government in a statement.

In terms of a template for additional deals, Trump said that 10% tariffs is the floor with some much higher.

OPTIMISM ON CHINA TARIFFS
He also expressed optimism that tariffs between the US and China would be lowered. The US has a 145% tariff on imports from China with some exemptions, and China has imposed a 125% tariff on imports from the US with certain reported exemptions.