On 16th June 2025, President Trump and Prime Minister Starmer signed the US-UK Economic Prosperity Deal, formalising the key points previously outlined in May.
For the US, the deal provides significant benefits with the opening of markets for Beef and Ethanol products as well as certain agricultural products. According to the White House it is estimated that the deal will result in a $5bn increase in US exports and provide an additional $6bn in import tariffs on UK goods.
The UK negotiations managed to hold off any US pressure to reduce its current sanitary controls blocking any prospect of chlorinated chicken entering the UK market.
Regarding the benefits for UK exporters, any hope of avoiding the 10% ‘liberation’ tariffs was quashed with the signing of the agreement. This was expected, as President Trump is relying on these additional tariffs to fund his internal US policies, but it still creates possible long-term costs in the supply chain which may ultimately affect UK exporters selling into the US market.
UK automotive
Quotas on UK manufactured vehicles have been confirmed, offering some comfort to the UK automotive Sector.
The tariff structure includes the existing 2.5% Most Favoured Nation (MFN) tariff, plus an additional 7.5% tariff to align with the UK’s tariffs on imported vehicles. Based on 2024 trade figures, the additional 7.5% tariff will introduce a further £622m in costs within this supply chain.
Further positive agreement was made with respect to automotive parts: the 10% tariff will also apply to UK part exports attendant to finished passenger cars that UK manufacturers export to the US. Ultimately this will result in increased costs to the US consumer.
UK steel and aluminium industries
The news was not so positive for the UK Steel and Aluminium industries, as the agreement did not provide a firm position on the tariff status of UK produced steel and aluminium. This will be subject to a separate agreement but a date on when this will be confirmed is yet to be announced. With 25% tariffs still applying, and the threat of 50% tariffs from July 2025, the UK Government must make this a priority to save these industries from potential collapse.
As expected, both sides agreed on exemptions for specific aircraft parts, benefiting the Aerospace industries in both countries. This aligns with President Trump’s promotion of the Boeing aircraft as part of the trade negotiations and will help keep the cost of Rolls Royce engines down. This will help benefit the UK with British Airways agreeing to purchase $5bn of Boeing aircraft as part of this deal.
UK agriculture
As a reciprocal measure, the US has agreed to increase the UK’s annual quota share to 13,000 metric tonnes for UK produced Beef. Based on figures provided by AHDB(1), there were only 2000 metric tonnes exported in 2024 meaning the quota provides plenty opportunities for UK exporters.
Next steps
"Overall, the trade deal does what it was supposed to do. It primarily benefits the US, as President Trump wanted, and UK exporters still continue to face 10% tariffs on its exports to the US."
As there was not agreement on the ‘Reciprocal’ tariffs, which could be imposed in July, UK exporters are still exposed to the risk of significant tariffs on non-UK originating products, such as those from the EU and China.
One glimmer of hope still remains as the Liberation tariffs are subject to US legal challenges, which could result in its removal. This would be a significant blow to Trump and could be financially catastrophic of all historical Liberation tariffs are subject to repayment.
With significant implications for multiple UK industries, it is vital that businesses understand how this agreement may affect their operations, supply chains, and export strategies. If you have questions about how the US-UK Economic Prosperity Deal impacts your industry, or need guidance on navigating the current trade landscape, please get in touch with us for further advice and tailored support.
(1) US beef market update: tight supply and stable demand to support global beef prices | AHDB
