News / UK-US trade deal brings tariff certainty – plus aerospace investment

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The UK aerospace sector received two pledges of support today which should see heightened trade, particularly with the US. 

The government announced a £250m ($340m) joint industrial investment for “cutting-edge green aerospace tech projects” at companies such as Rolls-Royce and Airbus. 

The news came as the White House published the terms of its agreement on tariffs with the UK – aerospace and civil aircraft will receive no tariffs, in another boost to the business. 

“The United States and the United Kingdom further committed to strengthen aerospace and aircraft manufacturing supply chains by establishing tariff-free bilateral trade in certain aerospace products,” noted the White House. 

One aerospace forwarder told The Loadstar: “This should benefit the sector – 0% tariffs on anything is a win. The US-UK aerospace market is huge. But the question is, how long will it last?” 

The investment deal, announced at the Paris Air Show, aims to drive the development of new technologies such as gas turbines, hydrogen-powered flight and the use of laser technology for large-scale aerospace manufacturing. 

New figures shows the UK aerospace sector contributed £13.6bn to the economy last year, up 50% over the past decade. 

UK industry may also benefit – relatively speaking – from the rest of the trade agreement with the US.

In automotive, the UK may export 100,000 vehicles (last year it exported 102,000) to the US at a tariff rate of 10%, 7.5% plus the most-favoured-nation rate for cars of 2.5%. The quota starts in seven days. Tariffs on auto parts will drop from 25% to 10%. 

The US also said that if the UK worked to meet requirements on the security of steel and aluminium supply chains, “and on the ownership of relevant production facilities”, the US would create a quota at “most-favoured-nation” rates. 

And in pharmaceuticals, a market the US is currently studying in advance of imposing tariffs, the White House said the two parties were “committed to negotiate significantly preferential treatment outcomes on pharmaceuticals and pharmaceutical ingredients that are products of the United Kingdom”. 

The agreement will give more certainty to some sectors which have been floundering with the lack of visibility.  

“You simply cannot do proper forecasting on what you hear. It used to be difficult to predict, now it’s impossible,” said one senior forwarder. 

But now at least, some sectors of UK trade have more certainty.