U.S. President Donald Trump and British Prime Minister Keir Starmer announced a trade agreement on Thursday to lower the tariff on vehicles and auto parts and to scrap a 25% tariff on steel and aluminium imports into the US that came into effect in March.
On top of the existing 2.5%, the Trump administration imposed last month a 25% tariff on imported vehicles and parts. The tariff was now lowered to 10%, applied to the first 100,000 U.K.-made vehicles entering the United States.
According to the Commerce Secretary Howard Lutnick, starting with the 100,001st vehicle, the U.K. will again face the 27.5% duty.
The deal, which was the first announced by the White House among several ongoing negotiations, maintains Trump’s 10% baseline tariff on all goods coming from the European Union and the United Kingdom imposed last month.
Trump stated earlier on Thursday that the agreement includes “billions of dollars of increased market access for American exports,” and that the UK will “reduce or eliminate numerous non-tariff barriers that unfairly discriminated against American products.”
According to the U.S. President, there are “many other deals, which are in serious stages of negotiation, to follow!”
However, when asked about upcoming agreements, Trump stated that the baseline tariff “is a low number,” indicating that the same conditions may not apply to future deals.
“This historic deal delivers for British business and British workers,” Keir Starmer said, adding that it protects “thousands of British jobs in key sectors including car manufacturing and steel.”
Trump also stated that Rolls-Royce engines and aircraft components from the UK will be exempt from U.S. tariffs and allowed to enter the country duty-free.
UK-Made Cars in the US
Last year, 101,000 British vehicles were exported to the other side of the Atlantic. Among the several brands manufacturing vehicles in the UK, BMW and Jaguar Land Rover, Rolls Royce stand out in U.S. sales.
The German automaker produces engines for both BMW and Mini models in Hams Hall, just outside Birmingham. BMW sold nearly 30,000 vehicles in the U.S. last month, according to data from Motor Intelligence.
The UK-produced lineup includes the BMW 2 Series Gran Coupe, the BMW 3 Series and the BMW i5 eDrive40, which are priced from $39,600, $45,950 and $67,100, respectively.
The sports car BMW M5 Touring is also made in the country, and the model is priced from $121,500 in the American market.
Jaguar also produces its vehicles in Birmingham, at its Castle Bromwich plant, which is currently being redeveloped as the brand aims to focus on electric vehicle production. The Jaguar Land Rover group sold 530 Jaguars and 9,815 Land Rovers in the United States last month.
Jaguar Land Rover announced last month that it would be pausing exports to the U.S over the announced tariffs. “Our priorities are now delivering for our clients around the world and addressing these new US trading terms,” the company stated.
This Thursday, Keir Starmer was at the Jaguar Land Rover plant in the West Midlands, where he stated that the new deal “means U.S. tariffs will be cut from 27.5% down to 10% for 100,000 vehicles every year,” which posts “a huge and important reduction.”
