Global Daily Tax News, UK, US Agree More Tariff Cuts, (Jun 18, 2025)

The UK and the US governments have agreed to further reduce tariffs on cross-border trade.

Announcing the deal on June 17, 2025, the UK Government said the US had committed to remove tariffs completely on the UK aerospace sector's exports and would cut tariffs on the auto sector to 10 percent within quota limits.

The UK Government stated: "For the first time, the US has committed to reducing tariffs on UK aerospace goods such as engines and similar aircraft parts from the general 10 percent tariff being applied to all other countries, which is expected to come into force by the end of the month."

It added: "The UK is the only country to have secured this agreement with the US which reduces car export tariffs from 27.5 percent, saves car manufacturers hundreds of millions a year, and protects tens of thousands of jobs, delivering on our Plan for Change."

The Government said that negotiations continue with the US on fully exempting exports of steel and aluminum from US duties, after the US Administration agreed to halve the rate on the UK, to 25 percent, rather than the 50 percent rate in place on the US's other trading partners.

In return, the UK has offered the US tariff-free access for US ethanol exports capped at 1.4 billion litres. Further, within a quota of 13,000 tonnes, the UK will scrap a 20 percent levy on US beef.

Associated British Foods, a company that operates the two largest bioethanol facilities in the UK, said the agreement to exempt US ethanol will be calamitous for the UK's bio-ethanol production facilities and for farmers.

Ahead of the latest announcements from the two countries, it said: "The National Farmers' Union has warned of the consequences the trade deal poses for Britain's agricultural and ethanol industries. Jointly, our plants purchase more than two million tonnes of wheat annually. We have already made commitments to farmers, and customers, which we will, of course, fulfil. But we are fast approaching the point where we need to decide whether to sign new contracts. In the current conditions, that would be irresponsible."

"Hundreds of growers will lose a dependable market for wheat that cannot be used in breadmaking. Instead, they'll be forced to export it at lower prices, while facing higher costs for imported animal feed."

"Without urgent government action, the UK's bioethanol industry will simply vanish, leaving the country dependent on imported ethanol – while also losing significant domestic production of carbon dioxide and high-protein animal feed."