News

President Trump and UK Prime Minister Keir Starmer on May 8 announced the “General Terms for the U.S.-UK Economic Prosperity Deal,” a five-page framework for bilateral trade negotiations. As the first such outline released since the United States imposed sweeping new tariffs on April 2, it provides partial relief from the U.S. Section 232 tariffs on autos, steel, and aluminum and outlines areas for further negotiation.

Unveiled on the 80th anniversary of Victory in Europe Day, the deal followed a week of intensive and, at times, stalled negotiations in Washington. Despite celebratory optics, the agreement leaves core issues unresolved, notably the continued application of the new U.S. 10% blanket tariff on virtually all UK goods; in addition, Britain’s Digital Services was untouched, as were services generally. Outcomes include:

• Baseline Tariff: The U.S. will maintain its new 10% baseline tariff on most UK goods. Since the UK’s tariffs are generally low and bilateral trade is nearly balanced, this outcome suggests the United States will resist entreaties to cut these duties in talks with other countries.

• Autos: U.S. and UK negotiators agreed on a tariff-rate quota (TRQ) for UK automobile exports to the United States. The first 100,000 vehicles per year will face a 10% tariff, and any vehicles above that cap will be subject to a 25% tariff. This quota is roughly equivalent to 2024 UK export volumes to the United States.
• Steel and Aluminum: In lieu of the U.S. 25% steel and aluminum tariffs, the U.S. has agreed to “construct a quota at most favored nation (MFN) rates for UK steel and aluminum” and derivative products. The UK accounts for approximately 0.3% of global steel production.
• Ethanol: The UK will offer a preferential duty-free TRQ of 1.4 billion liters for U.S. ethanol.
• Beef: The UK and U.S. agreed to a reciprocal 13,000 metric ton beef quota, though only U.S. beef enters tariff-free. UK beef into the U.S. will face tariffs between 4–10%.
• Aerospace: While it does not appear in the five-page framework, officials signaled agreement to afford tariff-free treatment for UK-made aircraft parts in exchange for a UK commitment to purchase $10 billion in Boeing aircraft.
• DST: The UK’s Digital Services Tax (DST) remains in effect. Despite earlier suggestions it could be removed, the framework did not do so.
• Digital Trade: The framework includes a commitment “to negotiate an ambitious set of digital trade provisions that will include within its scope services, including financial services.”
• Non-Tariff Barriers: The deal includes commitments to eventually develop disciplines on sanitary and phytosanitary standards, conformity assessment, standards, and Mutual Recognition Agreements. The two parties also note they “intend to strengthen cooperation on economic security, including by coordinating to address non-market policies of third countries.”

Try to See It My Way: Drawing on input from members, the Chamber had shared a set of recommendations with the Office of the U.S. Trade Representative. These include:

• Full elimination of “Liberation Day” tariffs;
• Termination of the UK’s DST;
• Binding digital trade rules on data flows and platform governance;
• Recognition of professional qualifications and talent mobility systems;
• Science-based sanitary and phytosanitary rules for agricultural trade; and
• Clear timelines for regulatory convergence in AI, pharmaceuticals, and cybersecurity.

A Long and Winding Road: The road ahead features the following milestones:

• The two governments will likely release comprehensive lists of products impacted by tariff changes.
• July 9, 2025: Checkpoint to assess implementation and determine scope for next-phase negotiations.
• May 19, 2025: UK–EU Economic Summit. This deal provides Starmer leverage for trade talks with the EU but will also subject London to scrutiny from its largest trading partner.
• Summer–Fall 2025: Anticipated working groups on digital trade, pharma, and economic security.

For further information, please contact Senior Vice President for European Affairs Marjorie Chorlins (mchorlins@uschamber.com).