On June 16, at the G-7 meeting in Kananaskis, Alberta, Canada, President Trump and U.K. Prime Minister Keir Starmer announced formalization of general terms for a bilateral trade agreement, operationalized by executive order. The agreement applies to trade in three broad industries: 

• First, in the automotive industry, the agreement sets a tariff-rate quota of 100,000 units at a tariff of 10%; beyond the quote imported U.K. vehicles will be subject to 25% tariffs. In 2024, the United States imported 96,483 light-duty vehicles from the United Kingdom, according to U.S. data, at an average wholesale value of nearly $85,000 each. This means the quota is set to accommodate most, if not all, U.K. motor vehicle exports to the United States. Auto parts produced in the United Kingdom for use in U.K.-made vehicles will also face 10% tariffs; presumably U.K.-made parts for non-U.K. vehicles will face 25% tariffs.  

• Second, in the aerospace industry, products for civil aircraft will be exempted from tariffs applied under other Trump administration executive actions. This measure applies largely to Rolls Royce jet engines and parts often used in U.S.-made aircraft. 

• Third, in the steel and aluminum industries, the agreement pledges to establish tariff-rate quota systems for metal products and derivative metal-using products at a future time. Currently, imported steel and aluminum products face duties of 50% under other Trump administration executive orders. Significant shares of U.K. metal products are not “melted and poured” in the U.K., but are made from semi-finished products imported from third countries of origin.  

While the president’s executive order cites “numerous non-tariff barriers that unfairly discriminate against American products” to be reduced or eliminated by the United Kingdom, it provides no further detail of such terms in the agreement.  The original announcement of general terms in May had indicated increased market access for American beef and ethanol—fuel derived from agricultural products—exports, but those details are also not included in the agreement.  

The agreement applies to industries covered by the president’s tariffs under Section 232 of the Trade Act rather than tariffs under the International Economic Emergency Powers Act that U.S. courts have deemed unlawful, though the tariffs were stayed on appeal. Thus, if the ruling is eventually upheld on appeal, it should not affect the terms of this agreement.  

Impact: 

The Trump administration’s approach to pursuing trade deals reveals the challenges of advancing a coherent strategy to rebalance U.S. trade relationships to support domestic manufacturing. If the Trump administration continues down this path, presumably, we would need to expect announcements in the near-term of nearly 90 individual “trade deals” with each major U.S. trading partner. This strategy represents a step backwards from the closed-door approach to negotiating trade agreements for special interests that has led to our current broken trading system. The Trump administration is side-stepping even the limited transparency and public accountability measures for formulating U.S. trade negotiating objectives, creating opportunities for self-dealing, conflicts of interest, and corruption.   

Ad hoc executive agreements like this do not carry the force of law of trade agreements ratified by Congress and could be reversed at the end of Trump’s presidential term, or sooner if the president has a change of heart. They also do not create mechanisms for monitoring and enforcing terms of a deal. As such, uncertainty about the durability of such “deals” will leave doubts among businesses, investors, workers, and consumers desiring predictability to plan for their futures.