Starmer urged to maximise pressure on US over tariffs ahead of Trump's visit

The UK's Commons Business and Trade Committee is urging Prime Minister Starmer to press US President Trump during his upcoming state visit to finalize an "economic prosperity deal," specifically seeking relief from the 25% tariff on British steel and greater trade predictability. This initiative follows the recent announcement of over £1.25bn in new private US investment into the UK financial services sector, with Business and Trade Secretary Peter Kyle confirming ongoing negotiations for steel tariff relief and an imminent announcement.

Analysis

The upcoming US presidential state visit to the UK is being positioned as a critical moment for bilateral trade policy, with the Starmer government under pressure to resolve outstanding tariff disputes. While a June trade agreement successfully reduced US tariffs on UK car and aerospace imports, a significant 25% tariff on British steel remains a major point of contention, attributed to US concerns over the origins of steel products finished in the UK. This diplomatic push coincides with the announcement of over £1.25 billion in new private US investment into the UK's financial services sector, part of a larger £20 billion bilateral trade and investment package. UK Business and Trade Secretary Peter Kyle has confirmed that negotiations on steel tariff relief are actively underway, signaling the potential for a breakthrough. The UK's strategic aims extend beyond resolving current tariffs, with the government seeking a broader "economic prosperity deal" that would also cover aluminium and pharmaceuticals, and leverage the US partnership to gain a competitive advantage over China in AI, defense technology, and critical mineral supply chains.

Key Decisions for Investors

• Investors with exposure to UK steel and aluminium producers should monitor the outcome of the US state visit, as a positive resolution on the 25% tariff could serve as a significant catalyst for the sector.
• The confirmed £1.25 billion US investment into UK financial services reinforces the sector's strength and may warrant a continued overweight position in UK-listed banks, asset managers, and fintech companies benefiting from transatlantic capital flows.
• Consider long-term positions in UK-based aerospace, automotive, and defense technology firms, as they stand to benefit from both the existing tariff relief and the stated strategic goal of deepening the US-UK partnership to counter China.
• While the immediate focus is on tariffs, the broader discussions on de-risking supply chains and securing critical minerals suggest potential opportunities in UK-based mining and materials science companies that align with these strategic priorities.