Sir Keir Starmer will send his top business adviser to Washington next week in a bid to resolve the outstanding trade issues surrounding steel and pharmaceuticals between the two countries, with hopes in London of an agreement in early July.
Varun Chandra will join UK embassy trade experts in Washington for talks on steel, aluminium and medical drugs, after Donald Trump decided on Monday to sign off tariff cuts for British carmakers and aerospace companies under the US-UK trade deal.
While Trump’s close relationship with Starmer has been instrumental in progress, British officials say a key interlocutor on the details has been Howard Lutnick, the billionaire businessman and US commerce secretary.
“Lutnick has come under some criticism in the US, but we have found him reasonable, engaged and a constructive counterpart in negotiations,” said one UK official. “He has worked at pace.”
However, the toughest part of the talks lies ahead, with details to be agreed on steel and pharma tariffs.
On Monday, Trump described the US-UK relationship as “fantastic” before brandishing a document confirming at the G7 summit in Canada that a deal on cars and aircraft parts had been concluded.
Starmer had to pick up the document as a gust of wind blew it out of Trump’s folder, in an appearance that showed the unlikely chemistry between the two leaders. “He’s slightly more liberal than I am, to put it mildly,” Trump quipped.
Asked if he could guarantee that the UK would be protected from future tariffs Trump replied: “The UK is very well protected. You know why? Because I like them.”
Trump’s executive order will “operationalise” last month’s US-UK deal, cutting a 27.5 per cent US tariff on cars to 10 per cent for the first 100,000 vehicles shipped from the UK each year. The deal will also spare UK exports of jet engines and other aerospace parts from US tariffs.
But British officials are still negotiating over the steel and aluminium provisions, with uncertainty over whether it would cover Britain’s biggest steel manufacturer Tata.
After closing its two blast furnaces at Port Talbot last year, Tata has been importing steel from its sister plants in India and the Netherlands for processing in the UK to then ship to customers. However, this could breach US rules that require all steel to be “melted and poured” in the country from which it is imported.
Gareth Stace, director-general of trade body UK Steel, said it was looking “forward to imminently benefiting from a tariff rate cut similar to that which the automotive and aerospace industries will enjoy in seven days”.
Starmer said at the G7 summit in Canada on Tuesday that the steel part of the trade deal was now at its “implementation phase”. He said that did not require Britain to change the Chinese ownership of British Steel, which runs two blast furnaces at its plant in Scunthorpe.
The government in April passed emergency legislation to take control of British Steel after China’s Jingye said it intended to shut the plant.
Chandra, a former managing partner of Hakluyt, a London-based consultancy, has been charged by Starmer with bringing the talks to a conclusion, working with key US embassy trade experts Mungo Woodifield and Kirsty McVicar.
The British side admits that talks on steel with the US side, also involving US trade representative Jamieson Greer, are “tricky” but officials say they are “reasonably confident we will get there” by the first week of July.
Steel producers in the rest of the world are contending with a 50 per cent levy on their exports to the US after Trump doubled the existing 25 per cent levy this month — though he offered the UK an exemption to allow time for the implementation of the trade deal.
The US-UK trade deal is meant to lower American tariffs on British steel and aluminium tariffs to zero.
Trump’s executive order on Monday also said the US would negotiate with the UK over any potential American pharmaceutical tariffs that may apply. “We’ve got a bit of work to do on that,” said one British official.
Starmer’s ability to make progress on a trade deal with the US — where others have failed — is seen in London partly as a reflection of the unlikely but apparently strong relationship between the prime minister and Trump, along with their teams.
But there is also a view that Trump wants to show the rest of the world that he is willing to do a deal with “reasonable” partners. “It’s a sign to the EU, Japan, South Korea and others that he’s willing to do a balanced deal,” said one UK official.