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The UK and the US are approaching agreeing to a trade agreement that mitigates the effects of Donald Trump’s “liberation day” tariffs, according to London and Washington officials.
The deal, which is scheduled to be signed this week, includes an allocation that will not spare UK exports from the full brunt of the additional 25% tariffs Trump imposed on steel and automobile imports in February and March.
UK trade negotiators returned to Washington this week at the final stage of negotiations. A British official said it was continuing “at speed,” warning that the disagreement remains on the medicine.
In addition to providing quotas for UK exports, the UK also wants to ensure a sector-specific 25% tariff reduction that Trump has imposed on automobiles and steel.
The UK “offers” include concessions to Washington on the UK’s digital services tax imposed on international technology companies, reductions in tariffs imposed on US automobile exports, and reductions in tariffs on American agricultural products.
However, the UK government has said it will not accept US food production standards, including chlorine-washed chicken and hormone-treated beef.
The expected UK-US deal is one of 17 agreements the Trump administration aims to sign with its major trading partners, as it will be charged on cleaning fees charged to countries around the world on April 2nd.
U.S. Treasury Secretary Scott Bescent said at a Congressional hearing on Tuesday that some of these transactions could be announced “probably as early as this week,” adding that several countries have made “good offers” without providing details.
Trump administration officials have been in discussion with several countries, including Canada, Mexico, Japan, Vietnam, India and the EU.
Some foreigners have personally expressed their frustration that they are unclear about how much tariff relief the administration will provide to trading partners.
If successful, the US-UK trade will follow a full-scale free trade agreement between the UK and India announced on Tuesday.
British Prime Minister Kielstama has put pressure on him to do business with the US after the UK’s auto and steel industries warned of possible “devastating” impacts on the sector from Trump’s tariffs.
Mike Haws, chief executive of the Association of Auto Manufacturers and Traders, a trade group, warns that the new US tariffs are having a “serious, significant, immediate” impact at the top of the sector.
Luxury Marches like Bentley, Jaguar Land Rover and Aston Martin rely heavily on exports to the US.
According to SMMT, the US is the second-largest export market for post-EU Britain’s second-largest automakers, with over 100,000 vehicles worth more than £7.5 billion last year.
One senior automotive industry executive welcomed news of potential low tariff allocations for UK vehicle exports, but warned that the key target should be to lower the tariff rate of 25%.
“Quotas are complex to operate and are essentially limited to trading,” the executive added. “The most important thing is to cut tariffs by 25% because it’s not sustainable, above about 10%.”
The UK was previously allowed to export up to 500,000 tons of steel to US tariff-free steel, under a contract with then-President Joe Biden.
He moved this year torn up by Trump as Trump repacked 25% tariffs to the US with all steel and aluminum imports.
UK steel, a trade association, has warned that Trump’s tariffs will curb exports of industries already under pressure from a global excess of metals.
The US accounted for approximately 165,000 tons of British steel exports in 2023. This is nearly £400 million worth around 8% of the total. UK exports to the US have almost half since 2017, when Trump imposed tariffs during his first term.
The two, with knowledge of negotiations, said the deal was supported by differences in opinion over the pharmaceutical sector.
Last month, the Trump administration launched a national security investigation into drugs and microchips that could pave the way for tariffs on the UK worth £6.6 billion in 2024.
According to UK officials, the UK has described the quota provided by the US as “generous,” and the UK is trying to avoid the worst possible impact of future tariff impacts.
The second British official explained that he described the expected deal as “limited.”
