Trump Signs First Trade Agreement With UK... 10% Tariff on 100,000 British Cars

Steel and Aluminum Granted 'Most-Favored-Nation Status'

Deal With Canada to Be Set Within 30 Days

U.S. President Donald Trump and UK Prime Minister Keir Starmer signed a bilateral trade agreement on the occasion of the G7 summit held in Alberta, Canada, on the 16th (local time). This marks the first time since Trump announced a 90-day suspension of mutual tariffs last April that the U.S. has finalized a separate agreement with an individual country.

According to the Associated Press, the two leaders had reached a basic agreement in a phone call on the 8th of last month and concluded negotiations with the signing on this day. After the meeting, President Trump stated, "We just signed the agreement, and it's done. Our relationship is fantastic." Prime Minister Starmer also commented, "This agreement is of great significance, especially for the automobile and aerospace sectors."

The White House disclosed the 'U.S.-UK Economic Prosperity Agreement' signed by President Trump. According to the agreement, the U.S. will set a quota (allocation) for 100,000 British-made cars per year, subjecting them to a 10% tariff. This rate is much lower than the current 25% tariff the U.S. imposes on foreign vehicles. The existing 25% tariff will remain on British steel and aluminum for the time being. However, it was agreed that the quota for British steel and aluminum eligible for 'most-favored-nation' (MFN) tariff rates would be quickly established if the UK meets U.S. requirements regarding supply chain security and ownership of production facilities. Under the World Trade Organization (WTO) system, the MFN tariff for most steel and aluminum is 0%, which means that only quota volumes would be exempt from tariffs. Bloomberg News explained, "While the UK government has secured substantial control of British Steel, the legal owner remains China's Jingye Group, so the quota has not yet been determined by the U.S."

Ahead of the expiration of the mutual tariff suspension set for the 9th of next month, leaders attending the G7 summit sought progress in their discussions with President Trump, but there was no significant breakthrough. President Trump met with Canadian Prime Minister Mark Carney and agreed for both countries to pursue negotiations to build new economic and security relations within 30 days.

Donghyun Kim, 3code@hankyung.com