Surrounded by workers and union reps at the Jaguar Land Rover (JLR) plant in Solihull, Keir Starmer was hooked up to the White House by video link, where Donald Trump and his officials, alongside the UK ambassador to the USA, Peter Mandelson, announced the deal.
The UK and US negotiating teams have been working for many years to reach a deal, particularly since Starmer’s meeting with Trump at the White House. But the UK government was up against the clock with the knowledge that JLR were preparing for immanent job losses due to Trumps tariffs on imported cars to the USA
Starmer’s match interrupted by Trump
Starmer had taken a call from Trump the night before, midway through the second half of the Arsenal v Paris Saint-Germain match, which Starmer was watching on TV in Downing Street. Negotiations had reportedly been tense, but Starmer had been advised a deal was within touching distance.
Trump wanted a deal to show the world that the USA was “open for business”. He also wanted reduced tariffs on ethanol (used in various products, including solvents, toiletries, disinfectants and biofuels) and pork. Starmer responded: “Ethanol yes; pork no.” The deal was done.
Deal or no deal
The outline of the deal has been well publicised and debated in the past week. While not a comprehensive trade deal, it marks the start of further talks that the UK hopes will eventually lead to a comprehensive agreement. But with Trump’s record for changing his mind there are no guarantees.
The deal reduces tariffs on UK car exports from 27.5% percent to the US baseline of 10% for 100,000 vehicles per year. It also reduces the proposed 25% tariffs on British steel and aluminium to zero. Conversely, 13,000 tons of US beef will be allowed to enter the UK without tariffs, which remains an area of major concern for the UK’s farmers. The NFU president Tom Bradshaw said:
“Our biggest concern is that two agricultural sectors have been singled out to shoulder the heavy burden of the removal of tariffs for other industries in the economy. While we understand this, we also know that today is the start, not the end, of a process and UK agriculture cannot continue to shoulder such imbalances in future negotiations.”
The White House had been looking to reduce the services tax on digital tech companies, but this issue was deferred to a later date, possibly forming part of a US-UK technology partnership.
The deal keeps Jaguar Land Rover’s engines running
Des Quinn, Unite’s national officer for the automotive sector, confirmed that big job losses were due to be announced by JLR had a deal not been struck. “Dates were in the diary – now they are not. We were looking at [layoffs of] four figures – plus a knock on of 40% in the UK supply chain. The job losses would have been immediate. There would have been no going back.”
Quinn confirmed that the 100,000 cars set to be exported under the 10% tariffs represent the number of vehicles JLR build annually for the US market. High-end brands, including Aston Martin, Bentley, Rolls Royce, and Mini, also export to the US, bringing the total to around 120,000 cars.
Professor David Bailey of Birmingham University, one of the UKs leading experts on the global automotive sector confirmed:
“This is huge for JLR, UK auto and the West Midlands. The US is JLR’s number one export market. Trump’s 25% tariff on car imports was a big blow for it and other auto exporters like Aston Martin and Morgan here in the West Midlands. Getting a deal and cutting that 25% tariff down to 10% means UK auto can live with the hit. The deal still leaves UK auto worse off as compared to two months ago, but the worst-case scenario has been avoided.”
And maybe a future in British Steel
The deal on steel was welcomed by Martin Foster, Unite convenor at British Steel in Scunthorpe: “While the plant was in the hands of the Chinese, there was little chance of a deal. The steel industry and the auto sector are inextricably linked, and it gives us an opportunity to steady the ship and look to the future and protect jobs.”
Alasdair McDiarmid, assistant general secretary at the UK steelworkers’ union, Community, said: “The government deserves enormous credit for negotiating this deal to remove US tariffs, which would have had a hugely damaging impact on our steel sector. The new agreement protects jobs in the UK, saves our industry tens of millions of pounds a year and provides much-needed certainty to enable future investments.”
Bumbling Conservatives split – business as usual
The deal received an initial cautious nod of approval from Shadow Business and Trade minister Andrew Griffiths, who said it was, “welcome for exporting business”. However, his boss, Kemi Badenoch, perhaps miffed that Starmer had secured a deal that had eluded her in government, claimed the UK had been “shafted”.
If anyone was ‘shafted’ it was probably Griffiths himself, who then had to do the media rounds, pouring cold water on the deal and demanding that Starmer returned to the negotiating table to secure a full-blown, comprehensive trade deal.
The UK-India trade deal: too spicy for some?
A few days earlier, the Tories and Reform were busy rubbishing the trade deal with India. Both Boris Johnson and Rishi Sunak’s oft-repeated promise that a deal with India would be “done before Diwali” came back to haunt Badenoch, who had to backtrack after arch Brexiteers William Rees-Mogg, Oliver Dowden and Daniel Hannon had all welcomed the deal.
The Tories and Reform claimed the deal would result in a “two-tier” tax system after it was revealed that some Indian workers would not be required to pay national insurance and that it would open the floodgates to Indian workers to take jobs in the UK.
Labour unleashes the attack sheep
In response, the government deployed Jonathan Reynolds and Douglas Alexander, who pointed out that so-called “double contribution conventions” are intended to stop workers temporarily seconded abroad from being taxed twice, and were not uncommon. Over 50 similar agreements are already in place with countries including the USA, Canada, and Japan.
Starmer accused Farage and Badenoch of talking “incoherent nonsense”. A helpful Indian government official told the Financial Times that Kemi Badenoch was talking “rubbish”, having agreed to exempt temporary Indian employees from national insurance contributions when she was the Tory business and trade secretary.
As a final riposte, Starmer said: “The Tories faffed about for eight years but never delivered a trade deal with India — my Labour government got it done in 10 months.”
Answering press questions at JLR, Starmer emphasised that the government stuck with it, determined to save jobs in the UK auto and steel sectors rather than “flouncing out” and “slamming the door”. This was aimed at Badenoch’s mishandling of trade negotiations with Canada, which collapsed over disagreements regarding beef and cheese. Although talks were officially paused, they never restarted.
The trade union perspective: a win or a sellout?
From a trade union perspective, a downside to the India deal is that it only refers to labour rights in the context of International Labour Organization Conventions, and these are not legally binding. This was a point not lost on TUC general secretary Paul Nowak, who commented:
“Our view on trade deals is consistent – they must be worker-focused and promote jobs, safeguard public services and protect his standards of workers’ rights. It’s right that the government has taken urgent action to protect good quality jobs up and down the country after Trump’s arbitrary tariffs threatened to take a wrecking ball to our automotive and manufacturing sectors. This agreement takes us back from the brink and many workers will breathe easier as a result.”
Deals are done but the work with the UK’s biggest trading partner is just beginning
Despite criticisms, Starmer’s government has succeeded in securing some form of deal with both the US and India, a feat that eluded the previous administration. In a further boost to Starmer, US commerce secretary, Howard Lutnick confirmed that Rolls Royce engines (and similar aero parts) will also be able to enter the US tariff-free as part of the deal, although there was no direct reference to this in the original five-page agreement.
All eyes will now be on the UK-EU Summit on 19 May at in London, where Starmer aims to reset the relationship with the EU. With a youth mobility scheme and extended fishing rights expected to be sticking points, the question arises: is he on for a hat-trick?
