The UK and United States are expected to announce a new trade agreement later today, marking the most concrete step towards tariff relief since Donald Trump’s sweeping protectionist measures reshaped global trade policy.
While the full scope of the deal remains under wraps, both governments have confirmed that it will focus on lowering duties in sectors that have been especially hard hit, with particular attention on the UK automotive and steel industries.
The announcement is scheduled for 3pm UK time, when Trump is expected to speak from the Oval Office. Prime Minister Keir Starmer is also due to provide a formal statement later in the day.
Car tariffs in the spotlight as UK exports face steep costs
At the centre of the talks is the 25% tariff the US currently imposes on imported cars, a duty that has weighed heavily on UK carmakers.
The United States is Britain’s most valuable car export market, with sales totalling around £9 billion in 2024. Jaguar Land Rover alone shipped 100,000 vehicles to the US last year, but temporarily halted exports last month due to the high cost burden.
Industry figures are watching closely to see whether the deal will provide a blanket reduction in tariffs or introduce a quota system where a certain volume of vehicles would be exempt from full duties.
Executives say they strongly prefer the former, warning that quotas could act as an artificial ceiling on future export growth. Still, one auto executive told the BBC that “a quota would be better than nothing”.
The potential outcome could have real consequences for competitiveness, supply chain planning and pricing strategies across the UK’s automotive sector.
Digital services tax a likely UK concession
In return for lower industrial tariffs, the UK is expected to scale back or potentially scrap its 2% digital services tax, a levy aimed at large US technology companies such as Amazon, Google and Meta.
Originally introduced to level the playing field for high street and small retailers, the tax was forecast to raise around £800 million a year.
A concession here would be politically sensitive for the UK government, which has positioned the tax as a fairness measure. However, it may be a necessary trade-off to secure relief in more politically pressing export sectors.
Baseline 10% tariffs and steel levies: Will they move?
Aside from cars and tech, both sides are also reportedly exploring adjustments to the baseline 10% tariff the US applies to most UK imports, along with the 25% duty on steel and aluminium.
For British manufacturers, changes here could provide much-needed breathing space after several years of suppressed demand and rising input costs.
A key issue to watch will be whether the agreement offers immediate across-the-board reductions or staged relief tied to volume thresholds.
Political and economic stakes are high on both sides
For Washington, today’s deal offers Donald Trump a chance to shift the narrative from escalation to pragmatism, an important signal amid investor concerns over renewed trade friction with China and broader inflationary risks.
It also comes just ahead of talks in Switzerland this weekend between US and Chinese officials, which could determine the trajectory of wider global trade relations.
For London, the announcement represents a diplomatic and economic win that does not compromise food standards or EU relations, and follows this week’s announcement of a separate trade agreement with India.
With UK exporters still adjusting to the post-Brexit landscape, even a narrowly focused deal with the US is politically meaningful.
What’s next for US–UK trade relations?
While today’s agreement falls short of a comprehensive free trade deal, it could lay the groundwork for more ambitious discussions in the months ahead.
Much will depend on how the automotive and tech sectors respond to the changes, and whether they view the framework as a stepping stone or a stopgap.
Investors and exporters will be watching the fine print closely. Whether the headline tariff reductions translate into meaningful commercial gains will hinge on the scope, scale and structure of what is agreed and how quickly any changes take effect.