LONDON — Keir Starmer thought he had an enduring trade pact with the U.S. to lower tariffs. Donald Trump appears to have other ideas.
A flurry of new tariff announcements on pharma, trucks and movies have left British officials scrambling to keep up — and exposed holes in the trade deal Starmer and Trump struck in May.
“I think it was a better deal for you than us, but these are minor details,” Trump told Starmer during a press conference amid the pomp of his second State Visit earlier this month, which saw the U.K. roll out a grand carriage procession with King Charles III, 1,300 troops, 120 horses and a fighter jet flyover.
Under the terms of the May deal, the U.S. lowered tariffs on British car exports to 10 percent, but the U.K. has failed to negotiate a long-promised zero-tariff rate for steel and aluminum.
And now, other threats are emerging.
Latest pill pressure
Trump has threatened to slap a 100 percent tariff on pharmaceutical imports unless firms have begun construction on U.S. plants.
While the EU insists it has capped its pharma tariff exposure at 15 percent, the U.K. position is less clear cut. The May trade pact, trumpeted by ministers at this week’s Labour Party conference, left the door open to “preferential treatment” on tariffs — but only if Westminster improves conditions for American pharma in the U.K.
That means one of Trump’s long-running gripes is back in play: the National Health Service’s price watchdog, NICE. Under the first Trump administration, U.S. firms criticized the regulator’s cost-effectiveness tests, which often force pharma companies to slash prices before patients can access new drugs.
Trump has decried what he called the unfair treatment of American patients — who pay more for drugs than those abroad — writing a letter to major pharmaceutical companies, demanding price cuts in line with “most favored nation” rates.
Britain’s pharma heavyweights have been quick to show they’re willing to honor Trump’s reshoring requests. GSK is already building an $800 million facility in Pennsylvania, while AstraZeneca unveiled a $50 billion U.S. investment plan stretching to 2030.
Since they are either “breaking ground” or have manufacturing facilities already “under construction” — terms Trump explicitly defined when clarifying who would qualify for exemptions — these British pharmaceutical giants seem to be exempt under these terms.
“It looks like some of the bigger companies [in Britain] might be okay, subject to where they are with their building,” said former government trade adviser Allie Renison.
Those firms may seek solace from the White House’s confirmation on Wednesday that it is pausing its plan to enact the tariffs, as it attempts to negotiate agreements with major firms to avoid higher duties on their name-brand products — like the deal it announced with Pfizer Tuesday.
But the Trump administration is expected to negotiate hard — and there is still lingering uncertainty over rules of origin terms for the industry.
The impact of Trump’s tariff threats on British pharmaceutical giants like AstraZeneca and GSK “needs to be seen in the much wider picture of U.S. demands given conditionality on agreeing tariffs and exemption for firms building U.S. sites,” said Mark Dayan, Brexit program lead at the Nuffield Trust.
“For the U.K., this is bound up in the requirements in the Economic Prosperity Deal,” he said.
Not only does this tie pharmaceutical tariffs to essentially paying more for medicines — the trade deal also states exemptions are contingent on Britain’s compliance with supply chain security requirements.
The industry runs on a sprawling global supply chain, with active ingredients, packaging and distribution separated across multiple countries. Trying to figure out where an active pharmaceutical ingredient comes from is challenging.
London is currently locked in talks with the U.S. government over NHS drug pricing. Science Minister Patrick Vallance has hinted the health service will need to pay more if Britain wants to stay attractive for investment.
“There is a question of how much money the NHS can put into this, how much goes on price,” he said, warning tariffs could make things worse if London doesn’t make “offers in this direction.”
Speaking at the POLITICO pub on the sidelines of the Labour Party conference, New Trade Secretary Peter Kyle labeled pharma companies “hard negotiators, [who] know how to use the media and the press to do it.”
”We are tough negotiators too, and we are in the process of negotiating lots of different arrangements and agreements and investments in pharma,” he added.
Starmer’s chief business adviser Varun Chandra flew to Washington this week, to try to head off tariffs — potentially in exchange for higher NHS spending on drugs ahead of the Wednesday deadline.
But the issue is politically sensitive for Starmer’s government.
“This is more sensitive than hormone-treated beef frankly,” Renison said, referring to the U.S.’s long-standing efforts to fo. “I think the government probably needs to be careful about being seen to connect the dots between U.S. pressures in this space and saying there’s a rationale for increasing the amount the NHS has to pay for it.”
Trucking along
Trump’s spree of recent Truth Social posts also included threats to impose 25 percent tariffs on U.S. imports of heavy trucks.
When it comes to the new tariff policy “there’s quite a lot of unknowns with this,” said a U.K. auto industry representative, pointing to the fact that “it’s just a post on Truth Social” at the moment without an executive order from the White House or initiation of an investigation by the U.S. Trade Representative’s Office.
Britain’s auto industry also only exports a small amount of Heavy Goods Vehicles to the U.S., but “we’re not quite clear on how they’re defining a heavy truck,” they said.
“Businesses need as much certainty as possible on tariffs,” said William Bain, head of trade policy at the British Chambers of Commerce, citing research by the industry body showing 60 percent of U.K. goods exporters are concerned about their customers paying higher prices.
Bain and the BCC plan to “urge” the U.K. government “to continue dialogue on tariff reduction with the U.S. administration in the interests of both U.K. businesses and their U.S. consumers.”
Sitting comfortably?
On Monday the White House issued a presidential notice saying that in mid-October, it will slap 25 percent tariffs on the value of imported kitchen cabinets, vanities and upholstered furniture and 10 percent duties on softwood lumber.
This is one British sector, however, which is sheltered by the May deal. The administration said that U.K. tariffs will be leveled at 10 percent, in addition to the original “most-favored nation” rates, per the terms of the deal.
The big hitter
The president has also decided to revive an earlier bugbear, vowing to impose yet another 100 percent flat tariff on “any and all movies that are made outside of the United States.
“Our movie making business has been stolen from the United States of America, by other countries, just like stealing ‘candy from a baby,’” he wrote on Truth Social earlier this week.
Paul Fleming, general secretary of Equity, the British union for performers in film, television and radio, said Trump’s threats have already complicated talks with U.S. studios.
“We saw some delays in investment when President Trump last raised this threat, but there is a pipeline of work in the U.K. which will benefit both Hollywood and U.K. studios,” he said. While he dismissed the latest threat as “erratic,” Fleming warned it was creating “an unhelpful level of uncertainty” during contract negotiations.
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