Trump–Starmer Trade Deal Kicks In: UK Luxury Cars Get 10% Tariff, Rolls-Royce Engines Fly Duty-Free Into US

The landmark trade agreement between President Donald Trump and British Prime Minister Keir Starmer officially took effect Monday, delivering immediate tariff relief for the United Kingdom’s automotive and aerospace exports to the United States.

What Happened: The deal reduces U.S. tariffs on UK cars from 27.5% to 10%, creating a quota system allowing up to 100,000 British vehicles annually at the reduced rate.

This represents significant savings for manufacturers, with the British government estimating hundreds of millions in annual cost reductions that could protect hundreds of thousands of jobs.

The aerospace sector secured even greater benefits. U.S. tariffs on UK aircraft parts and engines, previously at 10%, were eliminated. This directly benefits companies like Rolls-Royce Holdings Plc, which supplies engines to Boeing Co. BA.

“British car manufacturers can now export to the U.S. at a significantly reduced 10% tariff rate – down from 27.5% – and aerospace goods will see 10% tariffs removed, saving sectors hundreds of millions each year,” said Business and Trade Secretary Jonathan Reynolds.

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Why It Matters: The agreement has drawn criticism from major U.S. automakers in May. The American Automotive Policy Council, representing General Motors Co. GM, Ford Motor Co. F, and Stellantis NV STLA, argued the deal creates unfair competition. “It will now be cheaper to import a UK vehicle with very little U.S. content than a USMCA-compliant vehicle from Mexico or Canada that is half American parts,” the group stated.

University of Michigan economist Justin Wolfers called the luxury car exemptions “politically insane,” noting that high-end brands like Bentley and Aston Martin effectively dodge tariffs while basic commodities face duties.

The UK becomes the only country to secure such preferential treatment under Trump’s tariff regime. The deal also eliminates the 50% global tariff on UK steel and aluminum, with commitments to work toward zero tariffs on core steel products.

This marks the first major trade breakthrough since Trump paused global tariffs for 90-day negotiations in April.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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