U.S.-UK Trade Pact Keeps 10% Tariff Wall Intact

UK USA

On May 8, 2025, President Donald Trump and UK Prime Minister Keir Starmer unveiled a limited trade agreement aimed at easing certain tariffs and expanding market access between the two nations. While the deal marks a diplomatic milestone, it retains the controversial 10% baseline tariff on most UK exports to the U.S., signaling that protectionist policies remain a cornerstone of Trump’s trade strategy.

Key Provisions of the U.S.-UK Trade Agreement

The agreement introduces several notable changes:

  • Automotive Sector: Tariffs on British car exports to the U.S. are reduced from 27.5% to 10% for up to 100,000 vehicles annually.
  • Metals: U.S. tariffs on UK steel and aluminum imports are eliminated.
  • Agriculture: The UK agrees to remove tariffs on U.S. beef and ethanol, enhancing American agricultural exports.
  • Aerospace: The UK commits to purchasing $10 billion worth of Boeing aircraft, bolstering the U.S. aerospace industry.

Despite these concessions, the overarching 10% tariff on other British goods remains, reflecting a broader shift towards sustained protectionism.

Implications for Global Trade

This agreement, while a step towards improved U.S.-UK trade relations, underscores a larger trend in the Trump administration’s approach to international commerce. The retention of the 10% tariff suggests a long-term commitment to protectionist policies, potentially influencing future negotiations with other trading partners.

Economists express concern that such tariffs could lead to increased consumer prices and strained global supply chains. Federal Reserve Chair Jerome Powell has indicated that these trade barriers complicate efforts to manage inflation and employment.

The U.S.-UK trade deal represents a diplomatic achievement with modest economic benefits. While it alleviates certain sector-specific tariffs, the persistence of the 10% baseline tariff signals a continued emphasis on protectionist trade policies. As the global community watches closely, this agreement may serve as a template—or a cautionary tale—for future international trade negotiations.