- Effective 30 June 2025, a UK-US trade deal removes the 10% U.S. tariff on UK aircraft engines and parts.
- UK car tariffs fall from 27.5% to 10% under a 100,000-vehicle annual quota.
- Rolls-Royce and other aerospace firms could save hundreds of millions a year, supporting competitiveness and high-skill jobs.
- UK steel and aluminium still face 25% U.S. tariffs that could rise to 50% after 9 July without a further agreement.
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The UK+US agreement implemented 30 June 2025 marks a strategic win for the UK’s aerospace and automotive sectors. The aerospace industry, previously facing a 10% tariff on engines and aircraft parts, now faces no US import tariffs for those goods. This not only lowers costs but also improves competitive positioning for globally significant players like Rolls-Royce in both original equipment and aftermarket segments.
For the automotive sector, having a 27.5% tariff reduced to 10% under a quota preserves access to the large US market—though the quota of 100,000 vehicles limits scale. UK manufacturers such as Jaguar Land Rover and Bentley will benefit immediately from increased export flows, but growth beyond the quota remains uncertain.
Trade exposure remains for steel and aluminium producers. While UK steel and aluminium are currently only subject to a 25% US tariff, there is a hard deadline—9 July—after which UK risk facing a universal 50% tariff similar to other trade partners unless further concessions are secured. The urgency is underscored by union leaders’ warnings of job and plant losses.
Strategically, the UK has secured first-mover advantage by being the only country to lock in such favorable terms—tariff relief, sector-specific carve-outs, and protections—under the current US tariff regime. Aerospace and automotive firms could use the aerospace exclusion as a lobbying model for EU and Canada, pressing for similar terms to avoid disruptions and costs.
Open questions revolve around how the quotas will be administered, what happens when quotas are exceeded, whether full steel and aluminium tariff exemptions can be secured, and how the UK navigates rising tensions with the EU over retaliation measures and the broader implications of US trade policy volatility.
Supporting Notes
- The deal removes the 10% US tariff on UK aircraft engines and parts, effectively setting their rate at 0%.
- UK car export tariffs to the US fall from 27.5% to 10% under a quota of 100,000 vehicles annually.
- Aerospace sector savings are projected in the hundreds of millions per year, with thousands of jobs safeguarded.
- As of the deal’s enactment, UK steel and aluminium still face 25% US tariffs; unless a further agreement is reached, tariffs could jump to 50% from 9 July.
- Trade-groups like Aerospace Industries Association and General Aviation Manufacturers Association are pushing for aerospace exclusions in forthcoming deals using the UK template.