The UK-US trade deal will save thousands of jobs in the car and steel industry which had been threatened by Donald Trump’s tariffs, Sir Keir Starmer has said.
The trade agreement was confirmed in a call between the Prime Minister and the US President which was broadcast live on both sides of the Atlantic.
US import taxes which had threatened to cripple British high-end carmakers were cut from 27.5% to 10%, while the 25% tariff on steel has also been removed.
The blanket 10% tariff imposed on all imports by Mr Trump as part of his sweeping “liberation day” announcement remains in place.
Speaking to the Prime Minister from the White House, the US president said the agreement was a “great deal for both countries”.
But he said the “final details” of the agreement were still being “written up”.
The timing of the announcement came as a surprise, coinciding with VE Day where the Prime Minister was heavily involved in events to mark the 80th anniversary of the end of the Second World War in Europe.
Previous governments have attempted to secure a free trade agreement with the US, but with no success, however the impact of Mr Trump’s tariffs made it a high priority for Sir Keir.
Mr Trump said: “The US and UK have been working for years to try and make a deal and it never quite got there.
“It did with this Prime Minister, so I want to just congratulate you.”
Sir Keir said: “With this president and this Prime Minister, we’ve managed to achieve what many people tried to achieve for many years, and I’m really pleased.”
He added: “This historic deal delivers for British business and British workers protecting thousands of British jobs in key sectors including car manufacturing and steel.
“My government has put Britain at the front of the queue because we want to work constructively with allies for mutual benefit rather than turning our back on the world.”
What is included in the deal?
The US president had previously described the deal as “full and comprehensive”, but this announcement focused on a narrower set of industries.
Measures include:
- American tariffs on British cars fall to 10% for the first 100,000 vehicles exported to the US, while tariffs on steel are scrapped.
- The US has removed the 25% tariff rate on UK steel and aluminium exports, reducing the additional trade barrier for these goods to zero.
- Beef exports will be allowed both ways, with officials insisting there will be no weakening of food standards for meat sent to Britain.
- The UK will have “preferential treatment whatever happens in the future” when it comes to pharmaceuticals, as Mr Trump considers import taxes on drugs and medicines.
Steel union Community’s assistant general secretary Alasdair McDiarmid said the deal would protect jobs in the industry.
He said: “The UK Government deserves enormous credit for negotiating this deal to reduce US tariffs which would have had a hugely damaging impact on our steel sector.”
In exchange, the UK has reduced tariffs on US products including beef and ethanol, which US commerce secretary Howard Lutnick said would create five billion dollars in “opportunity for American exports”.
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What has the other reaction been to the deal?
Conservative leader Kemi Badenoch criticised the deal, saying Britain had been “shafted”.
She said: “When Labour negotiates, Britain loses. We cut our tariffs – America tripled theirs.”
Meanwhile, the Liberal Democrats demanded a vote on the deal in Parliament, saying it would show “complete disrespect to the public” if MPs were denied a say.
Sir Ed Davey said: “When it comes to any trade deal – and especially one with someone as unreliable as Donald Trump – the devil will be in the detail.
“One thing is clear, Trump’s trade tariffs are still hitting key British industries, threatening the livelihoods of people across the UK.”
The UK and US have struck a trade deal – with Keir Starmer and the UK government agreeing to concessions on American food and agriculture in return for easing tariffs on British car exports. British farming has been sold down the river by the government.
— No Farmers, No Food (@NoFarmsNoFoods) May 8, 2025
pic.twitter.com/vatWOiZ8x3
How has the car industry reacted to the announcement?
Philipp Sayler von Amende, Chief Commercial Officer at Carwow, says: “News that the UK and US have signed a deal to lower automotive tariffs to 10% is a significant relief for the British automotive sector. The US tariff on UK car exports had risen to 27.5% — a level that was always going to be unsustainable, especially for premium British brands that depend heavily on the US market.
"While the new 10% levy offers vital breathing room, the deal remains limited to a quota of 100,000 vehicles, though with potential for future expansion.
“Attention now shifts to Europe, where French, German, and Italian manufacturers remain fully exposed to the 25% levy. Brussels will be under increasing pressure to secure a similar deal to keep EU exports competitive in the US.”
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