On May 8, 2025, the White House published general terms for a future trade deal “to enhance [the] economic partnership” between the United States and the United Kingdom. The general terms, which names the forthcoming agreement as the U.S.-UK Economic Prosperity Deal, “do[] not constitute a legally binding agreement” but rather memorialize a set of “initial proposals” that will be the starting point for formal negotiations. Still, the general term related to tariffs “becomes operative on May 8, 2025,” and will ease some of the tariffs, but not all, that the United States and the United Kingdom levy on each other’s goods.
In total, there are six general terms. However, five of the general terms—the second (addressing non-tariff barriers), third (increasing digital trade), fourth (strengthening alignment and collaboration on economic security), fifth (commercial considerations and opportunities), and sixth (other matters)—are broad reaffirmations of commitments already made by the two countries or are aspirational in nature. For example, the second general term reads, in part: “The United Kingdom and the United States plan to work constructively in an effort to enhance agricultural market access. Further, both countries positively support future discussions to strengthen bilateral agricultural trade.”
By contrast, the first general term addresses tariffs and outlines specific concessions that the two countries are implementing immediately. In particular, the United Kingdom is removing its 20% tariff on U.S. beef, and raising its quota on 1,000 metric tons (mt) of U.S. beef imports to 13,000 mt. Additionally, the United Kingdom is extending a preferential duty-free tariff rate quota on 1.4 billion liters of U.S. ethanol.
In return, the United States is establishing a tariff rate quota so the first 100,000 vehicles from British automakers face a 10% tariff rate instead of the 25% tariff rate all other automobiles and certain automobile parts incur pursuant to Section 232 of the Trade Expansion Act of 1962 (see Update of April 3, 2025). Section 232 authorizes the president to adjust tariffs on imports deemed a threat to national security after an investigation by the Department of Commerce. The United States will also be “construct[ing] a quota at most favored nation (MFN) rates for UK steel and aluminum and certain derivative steel and aluminum products,” indicating the current 25% tariff on all steel, aluminum, and derivative products under Section 232 will soon be eliminated for the United Kingdom (see Update of March 12, 2025).
The first general term adds that the United States and United Kingdom will negotiate “preferential treatment outcomes on pharmaceuticals and pharmaceutical ingredients” as well, which seems to preemptively exclude the United Kingdom from higher tariff rates the United States may apply on such products pending the conclusion of a Section 232 investigation (see Update of April 15, 2025).
Although the general terms remain silent regarding whether the United Kingdom will still face the baseline 10% tariff that President Trump levied on all goods worldwide beginning April 5, 2025 (see Update of April 3, 2025), a White House fact sheet hailing the “historic trade deal” clarified that the baseline 10% tariff rate will remain in place on goods from the United Kingdom.