The UK government has officially confirmed it will announce a new customs tariff agreement with the United States later today, a move that could reshape transatlantic trade—particularly in the automotive and digital sectors.
Currently, the US imposes 25% tariffs on UK steel, aluminum, and cars, with a general 10% base tariff on nearly every other product. These duties have significantly impacted British exports, especially cars, which represent the UK’s largest export to the US, worth around £9 billion last year.
Jaguar Land Rover (JLR) alone sold 100,000 vehicles in the US in 2024 but was forced to temporarily suspend exports last month due to rising costs.
What’s on the table?
Industry leaders are now anxiously waiting to see whether the agreement will include a broad reduction of tariffs or the implementation of a quota system—which would allow a certain number of vehicles to be exported at low or zero tariffs, with higher tariffs applied to additional exports.
While a general reduction is the preferred outcome for manufacturers, many admit that “a quota system is better than nothing.”
In return, the UK is expected to reduce or remove its 2% digital services tax, which currently applies to tech giants like Amazon. This tax was designed to level the playing field for smaller and traditional retailers, generating around £800 million annually. Dropping it would be a major concession in favor of a broader trade reset.
Why it matters
This deal could:
- Boost UK car exports by removing punitive costs.
- Encourage stronger digital trade flows between the two countries.
- Signal renewed economic alignment post-Brexit.
As both nations seek to stabilize their economies amid global uncertainty, this agreement could mark a significant step in reviving trade ties and strengthening strategic economic cooperation.
