LONDON – June 30, 2025 — The U.S.-UK Economic Prosperity Deal, signed in May, officially went into effect today, with key provisions slashing tariffs on automobiles, aircraft engines, and aerospace parts, the British government confirmed in a press release.

The deal, hailed as a breakthrough after months of trade tension, reduces U.S. tariffs on up to 100,000 British-made cars annually from rates as high as 27.5% to 10%. It also removes duties on UK aerospace products, including aircraft engines and critical components, offering long-awaited relief to British manufacturers after a steep decline in exports.

British auto and aerospace firms, still recovering from pandemic-era disruptions and recent U.S. trade shifts, are expected to benefit from the tariff cuts. But the benefits come with limits, as strict annual quotas and broader global trade volatility continue to suppress export volumes.

Critical negotiations remain unresolved over U.S. tariffs on British steel and aluminum, which still face a 25% levy — and could rise to 50% on July 9 if no agreement is reached. The talks have hit a roadblock over U.S. “melted and poured” origin rules, which require metals to be fully processed in one country. This poses a serious challenge for firms like Tata Steel, which source raw materials internationally.

The original agreement was brokered by UK Prime Minister Keir Starmer and U.S. President Donald Trump on May 8, as part of broader efforts to repair transatlantic trade ties following the U.S. administration's sweeping "reciprocal tariffs" initiative introduced in April.

Under the deal:

• The U.S. will admit up to 100,000 British vehicles annually at a preferential 10% tariff.

• Tariffs on UK aircraft engines and aerospace components are eliminated.

• The U.S. gains expanded access to the UK market for products like beef and ethanol.

• Britain maintains its existing 10% baseline tariff on U.S. goods, consistent with its global policy.

Despite today's milestone, the agreement does not yet include final arrangements on steel and aluminum, and both sides have declined to set a timeline. With only days remaining until the potential doubling of U.S. tariffs on British metals, pressure is mounting on negotiators to reach a compromise.

Trade experts warn that without a deal, British industry could face renewed strain, even as other sectors benefit from the initial tariff cuts now in effect.