Basic 10% Tariff Maintained, Quota System for Autos
UK to Open Beef and Agricultural Markets
The United States has decided to lower tariffs on British-made automobiles from the previous 25% to 10% for up to 100,000 vehicles per year. For British steel and aluminum, the U.S. will exempt them from the 25% item-specific tariffs that have been imposed globally. In return, the United Kingdom will open its markets for ethanol, beef, agricultural products, and machinery to the United States.
On May 8 (local time), President Donald Trump announced this U.S.-UK trade agreement after a public phone call with British Prime Minister Keir Starmer at the White House.
Under this new U.S.-UK trade agreement, the United States will maintain a basic tariff rate of 10% on British goods, but will apply a low-tariff quota system, imposing only a 10% tariff on up to 100,000 British-made vehicles annually. Tariffs on British steel and aluminum will be exempted. Previously, the United States had decided to impose item-specific tariffs of 25% on automobiles, steel, and aluminum imported from all over the world. However, the White House explained that alternative agreements regarding the steel and aluminum tariff exemptions would be discussed.
The United Kingdom has agreed to open its markets for ethanol, beef, machinery, and all agricultural products. In addition, the UK will purchase Boeing aircraft worth $10 billion.
This U.S.-UK trade agreement is the first deal reached since President Trump announced reciprocal tariffs on all trading partners on April 2. At that time, President Trump stated that a basic reciprocal tariff of 10% would be imposed on all countries, and that additional country-specific reciprocal tariffs, taking into account each country's tariff and non-tariff barriers, would be applied. Currently, the country-specific reciprocal tariffs, except for the basic 10% tariff, have been suspended for 90 days.
However, this agreement is more of a basic framework containing only key principles, rather than a traditional trade agreement. Statements from the U.S. and UK leaders and both governments indicated that the final details will be determined through negotiations in the coming weeks. Local media have pointed out that the overall scope of this agreement is limited, and that the deal appears to have been hastily arranged by both governments.
Meanwhile, the United States is also conducting trade negotiations with South Korea, Japan, India, and Israel. In addition to the UK, it is reported that the U.S. is close to reaching a basic agreement with India as well. Regarding this, President Trump explained that the basic tariff of 10% for the UK may be considered low, stating, "Some countries have a massive trade surplus, so the tariff rate could be much higher."
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