Trump and Starmer seal surprise G7 trade deal as tariffs on cars and ethanol drop

Key Points of the Agreement The United States and the United Kingdom signed a new trade agreement on June 16, 2025, at the G7 Summit in Kananaskis, near Calgary, Canada. The deal, officially signed by President Donald Trump and Prime Minister Keir Starmer, significantly reduces tariffs in the automotive, aviation, and ethanol sectors, aiming to strengthen bilateral economic ties. According to the terms of the agreement, tariffs on up to 100,000 UK-manufactured cars exported to the US will be cut from 27.5% to 10%. Tariffs on aviation products including aircraft, engines, and parts will be eliminated entirely. The deal also removes tariffs on US ethanol exports to the UK, which annually consumes approximately 1.4 billion liters. However, US beef exports will be limited to a quota of 13,000 tons, with the existing 20% tariff and restrictions on hormone-treated beef still in place. Steel and aluminum tariffs will remain at 25%, but both sides are in ongoing negotiations to establish quotas, with supply chain security clauses added to address circumvention through third countries. During the ceremony, President Trump accidentally dropped part of the signed agreement, prompting a quick recovery by Prime Minister Starmer. Trump described the deal as “a fair deal for both,” adding “the UK is very well protected… because I like them.” Starmer responded by calling the agreement “a very good day for both our countries, a real sign of strength.” Industry reactions have been mixed. The UK’s automotive and aviation sectors are expected to benefit from lower financial burdens and increased exports, particularly manufacturers such as Rolls-Royce and Jaguar Land Rover. On the other hand, the UK’s domestic ethanol producers, including Vivergo Fuels and Ensus, are facing mounting pressure due to the influx of US ethanol and are reportedly seeking £75 million in emergency government support. US agricultural and aviation sectors are projected to gain roughly $5 billion in new export opportunities, with companies like Boeing expected to expand shipments. Meanwhile, negotiations on tariff exemptions and quotas for steel and aluminum must be finalized by July 9. Pharmaceutical regulations and restrictions on non-hormonal beef were not included in the agreement and will require further talks. Overall, the agreement underscores a strategic effort by both nations to deepen economic cooperation through targeted tariff reductions, while deferring more complex or politically sensitive sectors to future negotiations. Under the leadership of Trump and Starmer, the “Special Relationship” between the US and UK is being visibly renewed through economic diplomacy.