World

US strikes deal with UK, cuts China tariffs for 90 days

May 12, 2025 United States

The US will reduce import taxes on a set number of British cars and allow some steel and aluminium into the country tariff-free. It will also lower tariffs on Chinese goods from 145% to 30% for 90 days.

US-UK Deal

While the average tariff rate of 10% remains in effect for most goods, on the 8^th of May, US President Donald Trump and UK Prime Minister Keir Starmer reached an agreement covering strategic sectors for the UK economy such as the automotive, steel and aluminium sectors.

The US has agreed that the first 100 000 vehicles imported into the US each year will be subject to a tariff of 10%, with any additional vehicles being subject to a tariff of 25%. The 25% tariff on steel and aluminium imports to the US, which came into effect in May, has been scrapped. However, the US will instead establish a quota, as had previously existed – currently, these details remain unclear.

The trade deal will also increase US market access in the UK, creating opportunities worth 5 billion US dollars for new exports for US farmers, ranchers and producers. This includes over 700 million US dollars’ worth of ethanol exports and 250 million US dollars’ worth of other agricultural products, such as beef.

“The deal includes billions of dollars of increased market access for American exports, especially in agriculture, dramatically increasing access for American beef, ethanol, and virtually all of the products produced by our great farmer”, emphasised Donald Trump.

US-China

The US and China have agreed to significantly reduce the import tariffs they previously imposed on each other’s goods, marking a major step towards de-escalating their trade war. Under the deal, both countries will reduce their respective tariffs by 115% for 90 days.

Consequently, tariffs on US exports to China will fall from 125% to 10%, while the US will reduce its tariffs on Chinese goods from 145% to 30%. However, the US will maintain an additional 10% tariff on products covered by existing 20% fentanyl-related duties. These measures will come into effect on Wednesday, the 14^th of March.

This announcement followed talks held in Switzerland, the first between the two countries since the US imposed steep tariffs on Chinese imports last month. Going forward, negotiations will continue “in the spirit of mutual opening, continued communication, cooperation, and mutual respect”, reads the joint statement.

Image Credits: chris_robert on Unsplash

China United Kingdom United States Economy Tariffs Trade War