Britain, US near trade deal to ease Trump tariffs

According to officials in London and Washington, Britain and the US are on the verge of signing a trade agreement that would mitigate the impact of Donald Trump’s “day of liberation” tariffs.

The agreement, according to the Financial Times, would grant British car and steel exports lower tariff quotas. The deal, expected to be signed this week, would exempt some British exports from a portion of the additional 25% tariffs that Trump imposed on steel and automobile imports in February and March.

UK trade negotiators traveled to Washington this week for the final stages of talks. A senior British official stated that negotiations were proceeding “rapidly” but noted that disagreements over pharmaceuticals persisted.

In addition to offering quotas for its own exports, Britain hopes to secure reductions in the sector-specific 25% tariffs that Trump applied to cars and steel.

London will compromise but doesn’t want to undermine rapprochement with the EU

Among London’s “offers” are concessions to Washington on the digital services tax applied to international technology companies, reductions in tariffs on US car exports, and reductions in tariffs on American agricultural products.

However, the British government has stated it will not accept US food production standards, such as chlorinated chicken and hormone-treated beef. These standards could make it impossible to sign a veterinary agreement, which is a crucial part of Britain’s upcoming “reset” process with the EU.

The anticipated Britain-US agreement is one of 17 deals that the Trump administration aims to sign with major trading partners as part of a process to roll back comprehensive tariffs applied to countries worldwide on April 2.

To follow the Britain-India agreement

US Treasury Secretary Scott Bessent stated in Congress on Tuesday that some of these agreements could be announced “perhaps later this week,” noting that several countries had made “good offers” but did not elaborate.

White House officials are also holding talks with Canada, Mexico, Japan, Vietnam, and India, as well as the EU. Some foreign officials have privately expressed frustration with the administration’s lack of clarity regarding how much tariff reduction it will offer trading partners.

If an agreement is reached, the US-Britain deal would follow the full-scope free trade agreement between Britain and India, which was announced on Tuesday.

Pressure is mounting on UK Prime Minister Keir Starmer to sign a deal with the US after warnings from the British car and steel industries that Trump’s tariffs would have “devastating” effects on their sectors.

British automotive sector dependent on exports to the US

Mike Hawes, CEO of the trade organization Society of Motor Manufacturers and Traders (SMMT), warned that the new US tariffs were having a “serious, significant, and immediate” impact on the sector’s upper segment.

Luxury brands such as Bentley, Jaguar Land Rover, and Aston Martin are heavily reliant on exports to the US. According to the SMMT, the US is the UK’s second-largest car export market after the EU, exporting over 100,000 vehicles last year, valued at over £7.5 billion.

A senior executive in the automotive sector welcomed the possibility of reduced tariffs for Britain’s vehicle exports but stated that the primary goal should be the removal of the 25% tariff.

The executive said, “Applying quotas is complicated and hinders trade. The most important thing is the removal of the 25% tariff, because tariffs above 10% are not sustainable.”

Under an agreement with then-US President Joe Biden, London was permitted to export 500,000 tons of steel to the US annually tariff-free. This agreement was terminated this year when Trump imposed a 25% tariff on all steel and aluminum imports into the US.

The trade association UK Steel warned that Trump’s tariffs would halt the sector’s exports, which were already under pressure due to a global metal surplus. In 2023, the US accounted for approximately 165,000 tons of British steel exports. This was valued at around £400 million, representing approximately 8% of the total value.

Since 2017, when Trump first imposed tariffs, the UK’s exports to the US have almost halved.

Two people familiar with the negotiations said the agreement had been delayed due to disagreements related to the pharmaceutical sector. Last month, the Trump administration initiated national security investigations into pharmaceutical and microchip products, which could pave the way for tariffs on pharmaceuticals, an area where the UK exported £6.6 billion worth of goods to the US in 2024.

British officials described the quotas offered by the US as “generous,” stating that Britain was trying to avoid the worst effects of future tariffs. A second British official was more cautious, describing the expected agreement as “limited.”