The UK-US Economic Prosperity Deal:
How can UK businesses benefit?

Global trade is undergoing a seismic shift. Businesses in the UK and globally are navigating an increasingly fragmented and unpredictable global marketplace. Decades of globalisation are giving way to a new era defined by rising and rapidly changing tariffs, growing policy uncertainty and geopolitical tensions.

For UK exporters, the introduction of the UK-US Economic Prosperity Deal (EPD) offers targeted benefits for certain sectors, including automotive and aerospace. However, broader disruption and uncertainty look set to continue shaping the outlook for businesses engaged in international trade.

What is the purpose of the EPD?

The global tariff landscape has become significantly more volatile in recent years. For UK businesses, this unpredictability has been particularly acute in relation to the US. In April 2025, the US announced a new ‘reciprocal’ 10% baseline tariff on most imports from the UK. This measure formed part of a broader recalibration of US trade policy, which also introduced increased sector-specific tariffs on strategic goods including steel, aluminium and vehicles.

Following negotiation, the UK and US governments announced the EPD in May 2025. The EPD is a limited but strategically significant deal, aimed at mitigating some of the impacts of the new tariffs introduced by the US, particularly for key UK exporting sectors.

While the deal is subject to ongoing negotiation and refinement, its phased implementation has already introduced tangible benefits for certain industries.

Which UK sectors benefit from the EPD?

Rather than offering blanket tariff reductions on all goods, the EPD provides sector-specific tariff relief in areas of mutual economic interest. Most UK exports to the US continue to face the 10% baseline tariff, but preferential treatment has been agreed for a limited set of strategic sectors:

• Steel and aluminium: At the time of writing, UK steel and aluminium exports remain subject to a 25% tariff imposed by the US. However, under the EPD, tariffs on UK steel and aluminium will be removed for an unspecified quota, contingent on restrictions relating to ownership of UK-based production. While details and implementation remain unclear, the UK has been temporarily exempted from a higher 50% tariff on these goods now applied to other trading partners.
• Automotive: In March 2025, the US imposed a 25% tariff on all imported cars and car parts. Under the EPD, the UK has secured a quota of 100,000 vehicles per year which will benefit from a reduced 10% tariff. Exports beyond this threshold will revert to the full 25% rate.
• Aerospace: When reciprocal tariffs where announced, the aerospace industry was not included in the list of exemptions. However, under the EPD, certain UK aerospace goods will no longer face a tariff when imported into the US. Unlike other sectors, the tariff removal for aerospace is not subject to a quota.
• Pharmaceuticals: Pharmaceuticals is one of the few sectors exempted from the reciprocal tariffs introduced in April 2025. However, a US investigation into unfair trade practices in the sector is underway, which could result in future tariff measures. As part of the EPD, the US and UK have committed to negotiating ‘preferential treatment’ for the UK pharmaceuticals sector, subject to the outcome of that investigation. Notably, similar provisions have not been included in more recent US trade deals with other countries, suggesting that the UK pharmaceutical sector may be comparatively well positioned when the investigation concludes. 
• Remaining sectors: Most remaining UK exports, including industrial machinery, chemicals, plastics, electronics and clothing will face the 10% baseline tariff, which was not removed under the EPD. 

 Where has the UK reduced tariffs?

As part of the deal, the UK has made tariff reductions in areas of interest to US exporters. Specifically, the UK has agreed to grant a tariff-free quota of 1.4 billion litres of ethanol from the US, replacing a 19% tariff on ethanol. In addition, a previous quota of 1,000 metric tonnes of US beef, subject to a 20% tariff, has been replaced with a tariff -free quota of 13,000 metric tonnes. We may see further UK tariff reductions introduced over time.

What else has been agreed beyond tariffs?

While much of the attention around the EPD has been focussed on tariff reductions, the deal also includes a range of non-tariff commitments designed to strengthen UK-US cooperation more broadly:

• Economic security and investment: The UK and US have committed to deeper collaboration on economic security. This includes cooperation on investment screening mechanisms and export controls – particularly in response to non-market policies of third countries. While concrete actions have not yet been specified, the direction of travel suggests a closer alignment on national security-driven trade policy.
• Digital trade: Although the EPD does not currently include binding provisions on digital trade, it does commit both governments to future negotiations in areas including financial services and paperless trade.
• Non-tariff barriers: The EPD outlines future cooperation to reduce non-tariff barriers, particularly in regulated sectors. Areas flagged for future negotiation include agricultural market access, mutual recognition arrangements and domestic regulation for services.

Since the agreement was signed, US President Trump and UK Prime Minister Starmer have met to discuss further implementation of the EPD and potential areas for refinement, including the baseline tariff, steel and aluminium tariffs and the pharmaceuticals sector.

 How can I check which tariffs affect my goods?

The tariff rate applied to a good is dependent on the commodity code, the country of origin and the country of import. Rates can vary significantly depending on whether goods qualify for preferential treatment under a trade agreement or face additional duties under new policy measures (e.g. retaliatory tariffs).

For UK businesses seeking to determine the applicable tariff rate for their goods:

• UK imports: the UK Trade Tariff tool can be used to identify the current duty rates and commodity codes for goods imported into the UK.
• UK exports: The UK government maintains a database of duties charged on UK origin goods, which can be accessed through the ‘check duties and customs procedures for exporting goods’
• US tariffs: The US International Trade Commission’s Harmonized Tariff Schedule contains detailed information on the duties applied to US imports.

Given the recent volatility in tariff rates, it is important to understand that the tariff treatment of a good is typically based on the date of customs clearance rather than the date of shipment. A tariff rate may therefore change while goods are in transit, particularly for sea freight.

 What should UK businesses be doing now?

 While the EPD is not a comprehensive free trade agreement, it does represent a strategic recalibration of the UK-US trading relationship. In the context of a more fragmented global trade environment, the EPD offers targeted tariff relief for the automotive and aerospace sectors, as well as a commitment to future cooperation.

As negotiations continue and implementation progresses, UK businesses should monitor how the EPD and broader changes to the tariff landscape impact their operations and reshapes cross-border trade in key sectors. For support in understanding how recent developments in trade policy could impact your business, Deloitte’s specialists are on hand to help.