NextFin news, London — On Thursday, October 2, 2025, British officials found themselves grappling with a series of new tariff threats from U.S. President Donald Trump that are undermining the trade agreement struck with UK Prime Minister Keir Starmer earlier this year. The flurry of tariff announcements on pharmaceuticals, heavy trucks, and movies has exposed significant gaps in the May trade deal, leaving UK negotiators scrambling to respond.
During Trump's second state visit to the UK earlier this month, he told Starmer, "I think it was a better deal for you than us, but these are minor details," highlighting tensions despite the pomp of the visit, which included a grand carriage procession with King Charles III and military displays.
The May trade deal had lowered U.S. tariffs on British car exports to 10 percent but failed to secure a promised zero-tariff rate for steel and aluminum. Now, Trump has threatened to impose a 100 percent tariff on pharmaceutical imports unless companies begin construction of manufacturing plants in the U.S., a move that could significantly impact British pharma giants like AstraZeneca and GSK.
While some British pharmaceutical companies have announced substantial U.S. investments—GSK is building an $800 million facility in Pennsylvania and AstraZeneca unveiled a $50 billion investment plan through 2030—uncertainty remains over tariff exemptions and compliance with U.S. supply chain security requirements. The White House has temporarily paused the tariff imposition to negotiate drug pricing agreements, including a recent deal with Pfizer.
British officials are also concerned about Trump's threat to impose a 25 percent tariff on U.S. imports of heavy trucks, although the UK exports relatively few heavy goods vehicles to the U.S. The definition of "heavy truck" remains unclear, adding to business uncertainty.
Additionally, the White House announced plans to impose tariffs of 25 percent on imported kitchen cabinets, vanities, and upholstered furniture, and 10 percent on softwood lumber starting mid-October. However, these sectors are somewhat protected under the May deal, which caps UK tariffs at 10 percent plus the original most-favored nation rates.
Trump has also revived a previous threat to impose a 100 percent tariff on all movies made outside the United States, a move that has complicated negotiations between British film unions and U.S. studios. Paul Fleming, general secretary of Equity, the UK performers' union, described the threat as "erratic" but warned it creates uncertainty during contract talks.
UK Trade Secretary Peter Kyle acknowledged the challenges, describing pharmaceutical companies as "hard negotiators" but affirmed the UK government's commitment to tough negotiations and ongoing investment discussions. Starmer's chief business adviser, Varun Chandra, recently traveled to Washington to try to avert tariffs, potentially by agreeing to increased NHS spending on drugs, a politically sensitive issue in the UK.
The tariff threats come amid ongoing talks between London and Washington over NHS drug pricing and supply chain security, with Science Minister Patrick Vallance indicating that the NHS may need to pay more to maintain investment attractiveness.
British business groups, including the British Chambers of Commerce, have urged the UK government to maintain dialogue with the U.S. to reduce tariff risks and protect exporters from higher costs. William Bain, head of trade policy at the BCC, emphasized the need for certainty for businesses and consumers alike.
As of October 2, 2025, the evolving tariff situation continues to challenge the UK-US trade relationship, with British officials working to mitigate the impact of President Trump's tariff threats on key sectors of the UK economy.
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