The US will levy a minimum tariff of 10% on items from the UK, according to the latest round of negotiations between the Trump administration and international partners. The announcement comes at a time when businesses are bracing for economic impacts and stockpiling goods in the US ahead of massive tariff increases.
Steel, aluminum, and jet engines are exempt
“The deal includes billions of dollars of increased market access for American exports,” President Donald Trump said on May 8.
In addition to the negotiated amount of 10%, the UK will loosen restrictions on US beef and ethanol. Some goods, including steel, aluminum, and jet engines, will be exempt. Car companies selling more than 100,000 units will see a 25% tariff; cars in the first 100,000 units will face the 10% tariff. (Britain’s tariffs were less than 2% in 2023.)
The deal with the UK is the first of the Trump administration’s renegotiated tariffs. The administration has used a classic bargaining strategy – aiming high and working downward – to remake what had been relatively stable trade agreements with allies as well as to shake up adversarial but financially lucrative relationships like that between the US and China.
As the BBC pointed out, a formal trade deal typically needs approval from Congress; Trump’s informal negotiations will likely involve additional details and further discussion. In early April, Trump declared a national emergency to allow expedited movement on foreign trade and economic relationships; however, Congress is given Constitutional authority to oversee foreign commerce.
US officials plan to meet with their Chinese counterparts to discuss trade deals this weekend in Switzerland.
Stocks rose in the US after the news of the nearly-final deal with the UK was approved. Some analysts see the rebound as another symptom of how uncertain geopolitical relationships have become as the Trump administration goes back to the drawing board with longstanding allies like the UK.
Earlier this week, Trump called for a 100% tariff on foreign-made films.
Digital services tax remains unchanged
Much of the technology made in the UK for sale in the US is heavy machinery, vehicles, or aircraft parts – thus the exemptions. Other vehicle parts, including lithium-ion batteries, are not exempt.
There was no change discussed to the UK’s 2% digital services tax. The tax applies to the largest tech companies, many of them American, if they make £500m in global revenues and £25m from UK users annually.
Britain sends about 16% of its total exports to the US.
