British manufacturers and automotive firms have welcomed a new UK-US trade agreement that slashes tariffs on key exports, marking a significant breakthrough for sectors hard-hit by trade tensions in recent years.
The deal, announced Thursday, reduces US tariffs on British car exports to 10% — covering up to 100,000 vehicles annually — and eliminates a proposed 27.5% duty on UK steel. The agreement, the first to be completed under US President Donald Trump’s updated trade strategy, is seen as a vital step in easing transatlantic trade friction and restoring business confidence.
Industry response was swift and positive, with UK industrial and automotive stocks rallying. Shares in Aston Martin Lagonda surged nearly 14%, while Melrose Industries and IMI rose by more than 5%. Rolls-Royce also posted gains, contributing to a 0.6% lift in the FTSE 250 index.
“This deal removes a severe and immediate threat to UK automotive exporters,” said Mike Hawes, Chief Executive of the Society of Motor Manufacturers and Traders. “It provides much-needed relief, allowing both the industry and its workforce to approach the future more positively.”
As part of the deal, the UK agreed to reduce tariffs on American ethanol and expand market access for US beef. However, it held firm on contentious issues such as food safety standards and digital taxation, areas that have previously complicated trade discussions with Washington.
Despite progress on steel and automotive goods, a 10% blanket tariff remains in place for other British exports, which is expected to generate around $10 billion for the US Treasury.
The agreement follows the Trump administration’s 90-day suspension of broader tariffs impacting over 100 countries and is seen as a signal of renewed engagement with traditional allies. “This provides a little optimism heading into the weekend’s negotiations with China,” said Gene Goldman, Chief Investment Officer at Cetera Investment Management.
The announcement came alongside a decision by the Bank of England to cut interest rates by 0.25 points to 4.25%, with Governor Andrew Bailey warning that tariff uncertainty could trim UK economic growth by 0.3% over the next three years.
While the trade deal was broadly welcomed, analysts urged caution. John Denton, head of the International Chamber of Commerce, noted that overall US tariffs on UK goods remain elevated compared to earlier in the year. He also warned that possible future levies on sectors like pharmaceuticals could dampen long-term investor sentiment.
Sterling edged lower against the dollar to $1.33, though it rose slightly against the euro. Bond yields ticked upward, with 10-year gilts climbing to 4.55%.
Despite lingering concerns, the agreement is viewed as a strategic win for British exporters and a positive sign for ongoing trade negotiations with other global partners.
