Tariff breakthrough: UK aerospace wins big in landmark US trade deal
The UK’s aerospace sector is set to benefit from a significant tariff cut following fresh progress on a bilateral trade deal with the United States.
The agreement, revealed on Tuesday, will see the complete removal of tariffs on UK aerospace exports to the US by the end of June.
The UK government said the move would help ease pressure on major manufacturers including Rolls-Royce while safeguarding thousands of jobs across the industry.
The US has, for the first time, committed to reducing duties on UK-made aerospace components such as aircraft engines and parts.
These items are currently subject to a general 10% tariff applied to most other countries, but will now receive preferential treatment as part of the UK-US accord.
‘Impact cannot be overstated’
Kevin Craven, CEO of ADS, the trade association for the UK’s aerospace, defence, security and space sectors, called the agreement “phenomenally welcome news”.
“As of today, aerospace is the only sector to be completely tariff free. The impact of this cannot be overstated – the role of UK aerospace in the wider global landscape is critical, keeping people connected and ensuring sustainable, prosperous innovation,” he added.
“We wholeheartedly commend the negotiating teams both at home and across the pond, and hope to see this trend of freer, closer trade and cooperation with our international friends and allies continue.”
ADS figures show UK aerospace adds £13.6 billion in value to the UK economy, up by half in just the last decade.
The industry has achieved £34 billion in turnover, up a quarter since 2014, with £23.2 billion in exports, up a third over the last decade.
Commenting on the deal, Tufan Erginbilgic, Rolls-Royce CEO, said: “The tariff exemptions on aircraft, aero engines and parts that have been secured are truly significant.
“Alongside the anticipated UK government’s commitment to the sector in the forthcoming Industrial Strategy they will help British aerospace to thrive, creating skilled jobs, exports and delivering growth for the UK economy.
“The US is a vitally important market for Rolls-Royce and we welcome the strengthening of trade ties between the two countries.
“Aerospace is an engine for growth for the global economy. Rolls-Royce plays a critical role in ensuring the UK has highly-differentiated and world-leading capability in aero-engine technology.
“With strategic investment and long-term planning, it delivers economic growth, skilled jobs and exports.”
Tariff deal
The latest agreement builds on earlier UK-US arrangements, including a commitment to exempt British steel and aluminium from punitive global tariffs of up to 50%.
Business and Trade Secretary Jonathan Reynolds said: “We agreed this deal with the US to ensure jobs and livelihoods in some of our most vital sectors were protected, and since then we have been focused on delivering those benefits to businesses.
“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.”
