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At the G7 Summit in Canada’s Kananaskis, US President Donald Trump and British Prime Minister Keir Starmer announced a new trade arrangement on Monday, marking significant progress in bilateral trade discussions.

The agreement, which was signed on the sidelines of the summit, reduces certain tariffs on British imports but leaves several contentious issues unresolved, particularly concerning steel and aluminium, reported Reuters.

The signed deal includes provisions to maintain existing quotas and tariff levels on British automobiles while eliminating levies on the UK’s aerospace sector. However, industries such as pharmaceuticals were notably absent from this initial agreement.

Standing alongside Starmer, Trump described the bilateral relationship as “fantastic” and waved the freshly signed document, though he initially mischaracterised the deal as involving the European Union before clarifying it pertained solely to Britain. Starmer praised the development, calling it “a very good day for both of our countries, a real sign of strength."

Steel and Aluminium Talks Ongoing

Despite progress on several fronts, a major sticking point remains in negotiations over steel and aluminium imports. According to an executive order from the White House, the United States plans to impose quotas on these British imports, exempting them from the standard 25 per cent tariffs. However, these exemptions are conditional upon the UK proving its security measures regarding steel supply chains and production processes. The final quota levels will be determined by Commerce Secretary Howard Lutnick.

Earlier this month, Britain successfully avoided US tariffs as high as 50 per cent on steel and aluminium, but a failure to reach an agreement by July 9 would have exposed British exports to these elevated duties. The current understanding offers temporary relief, though full resolution remains pending.

Auto and Aerospace Sectors Secure Key Gains

Under the new framework, British automakers will be allowed to export up to 100,000 vehicles annually to the US market at a reduced tariff rate of 10 per cent, significantly lower than the 25 per cent rate imposed on other nations. This automotive provision, alongside the removal of tariffs on aerospace products including parts and aircraft, is scheduled to take effect seven days after official publication in the Federal Register.

The UK Trade Secretary, Jonathan Reynolds emphasised the deal’s benefits, highlighting the aerospace and auto industries as key winners. “Bringing trade deals into force can take several months, yet we are delivering on the first set of agreements in a matter of weeks. And we won’t stop there," Reynolds stated. He also confirmed that both sides had agreed to reciprocal access allowing up to 13,000 metric tons of beef exports, though US products will still need to comply with stringent British food safety standards.

More Discussions To Follow, Focus On Pharma Sector

While some significant advances have been made, several aspects of the broader trade relationship remain under negotiation. Both nations are actively working towards achieving preferential terms for the UK pharmaceutical sector and ensuring protection against potential new tariffs linked to ongoing Section 232 investigations by the US Commerce Department.

In response to a question about whether the UK is shielded from future US tariff threats, Trump responded in typical fashion: “The UK is very well protected. You know why? Because I like them. That's their ultimate protection.”

Despite this partial breakthrough, many observers note that the path to a comprehensive and fully resolved trade deal remains complex, with multiple sectors still awaiting clarity.