UK shares rise as US exempts Britain from additional metal tariffs

UK Shares Rise as US Exempts Britain from Additional Metal Tariffs

London, June 4, 2025 — UK equity markets climbed on Wednesday after the United States announced it would exempt the United Kingdom from the latest round of proposed metal tariffs, a decision hailed by businesses and investors alike as a step toward easing global trade tensions.

The FTSE 100 rose 1.2% by mid-afternoon, led by gains in industrials, mining, and manufacturing stocks. The positive sentiment followed an official statement from the US Department of Commerce confirming that Britain would not be subject to the 25% tariffs on steel and 10% on aluminum imports recently proposed on several other trading partners.

Market Reaction and Sector Gains

Shares of British steel producers, such as Tata Steel UK and Liberty Steel, saw immediate gains of 3.5% and 4.1%, respectively, while multinational engineering firms like Rolls-Royce Holdings and BAE Systems also climbed over 2%.

The FTSE 250, more domestically focused than the blue-chip FTSE 100, recorded a more modest increase of 0.6%, reflecting optimism across a broader range of sectors.

“This exemption comes as a welcome relief for UK manufacturers,” said Fiona Bradley, senior equity strategist at Harrington & Rowe. “It preserves competitive access to the US market and limits the potential ripple effect of retaliatory measures.”

Background: Tariff Escalation and Strategic Diplomacy

The US had recently floated additional tariffs on metal imports from various countries, citing national security concerns and a need to protect domestic producers. While the European Union was bracing for sweeping levies, Britain was granted an exception due to what US officials described as “productive trade cooperation and alignment on geopolitical security.”

The UK Department for Business and Trade confirmed that the agreement included a mutual commitment to transparency in export practices and continued collaboration on addressing global overcapacity in the steel and aluminum markets.

“Today’s decision reflects the strong trade ties and shared strategic interests between the UK and the US,” said Trade Secretary Jonathan Reynolds. “Our industry stands to benefit greatly from this stability.”

Analyst Perspectives: Tariff Relief and Beyond

Market analysts suggest the move could signal a broader thaw in trade relations between major Western economies, especially as the global economy grapples with lingering inflation and supply chain recalibrations.

“Avoiding tariffs is always good news for equity markets, but this exemption is particularly significant,” said Mark Donnelly, head of global equities at Barclay & Trent. “It sends a clear message that the UK remains a valued trade partner, and that’s reassuring for both British firms and multinational investors.”

The pound also reacted positively, gaining 0.4% against the US dollar to $1.2785, buoyed by the implications for export-oriented industries.

Broader Implications for UK Industry

The UK metal industry employs around 30,000 workers directly and supports many more indirectly through its supply chains. The exemption is expected to prevent increased input costs that could have resulted from diversionary trade or the need to source materials from alternative regions.

“Tariffs would have raised costs across the board—from construction to automotive manufacturing,” noted Sarah Hall, an industrial economist at the London School of Economics. “Today’s announcement avoids those headwinds and supports job retention.”

Meanwhile, the Confederation of British Industry (CBI) called the decision “a lifeline” and urged the UK government to build on this momentum with further trade liberalization talks.

Investor Outlook: Stability and Strategic Positioning

With global markets still recovering from recent volatility in energy and commodities, the tariff exemption offers a pocket of certainty. Analysts recommend a cautious but positive stance on UK industrial and export-reliant stocks.

“Investors should see this as an opportunity to reallocate toward underperforming UK cyclicals,” said Olivia Nguyen, a portfolio manager at GlobalAxis Capital. “We expect follow-through buying in companies with high US exposure and industrial linkages.”

However, some caution that the long-term outlook depends on broader geopolitical dynamics, especially as the US election season begins to take center stage.

The US decision to exempt the UK from additional metal tariffs marks a meaningful development in trade relations, with tangible benefits for markets and industries on both sides of the Atlantic. For investors, it offers renewed confidence in the resilience of the UK market amidst a complex global economic environment.

While uncertainties remain, the immediate response in share prices, currency strength, and sector optimism indicates a shared belief in the value of cooperation over confrontation.