The UK and the US jointly announced a trade agreement yesterday (8 May), which will see the reduction and removal of several trade barriers introduced by US president Donald Trump earlier this year.
The US-UK Economic Prosperity Deal (EPD) was announced via a televised phone call between the two leaders, with UK prime minister, Sir Keir Starmer, calling it a “historic day” adding that thousands of manufacturing jobs will be saved by the deal, with new ones created through increased market access.
US president, Donald Trump, called the agreement a “great deal for both countries”, while emphasising “billions of dollars of increased market access for American exports”, especial agricultural products.
The 10% ‘reciprocal’ tariff rate, which was applied to UK exports to the US earlier this year, is unaltered by the agreement and remains in place.
Initial reactions
In the UK, the deal’s reception has been less warm, with farming bodies raising concerns over the high level of US access on multiple goods, including beef and ethanol.
In the House of Commons, Liberal Democrat leader, Sir Ed Davey, said that “the devil is in the detail”, a point echoed by some businesses who told the BBC they wanted greater clarity.
In a statement on the deal, Chartered Institute of Export & International Trade director general Marco Forgione, said it's a “welcome relief” for UK manufacturers affected by tariffs but noted that further negotiations must “expand [the agreement] in a meaningful way”.
He added that many of the body’s members had reported “feeling the strain” of the additional 10% tariffs.
Conservative Party leader, Kemi Badenoch, dismissed the characterisation of the deal as “historic”, claiming the UK had been “shafted”.
British industry benefits
The agreement outlines how recent US tariffs will be reduced on key British manufacturing sectors. Duties on car export will be lowered from 27.5% to 10%, while tariffs on steel and aluminium will be removed entirely.
In a press statement announcing the agreement, the Department for Business and Trade said the measures would save “thousands of British jobs across the country”.
Jaguar Land Rover’s (JLR) chief executive, Adrian Mardell, said the firm “warmly welcome[s] the deal, which secures greater certainty for our sector and the communities it supports”.
JLR suspended all exports to the US last month on account of Trump’s tariffs.
A quota of 100,000 units is in place for the car tariff reduction, beyond which tariffs will be reinstated. However, this accounts for most UK car exports, which totalled 101,000 units last year.
US market access
The UK has agreed to remove tariffs on ethanol for US imports, which means American alcoholic products made using ethanol, like beer, can be sold competitively in the UK.
The deal also includes “reciprocal market access” on beef and other agricultural products. The UK said this was a boon for its farmers, while Trump emphasised that UK market access for the agri-sector is unprecedented.
Agricultural trade has previously been a sticking point in trade negotiations, owing to UK consumers’ concerns about goods like chlorinated chicken and hormone-fed beef, which fall below UK food standards.
However, in the days before the deal’s announcement, government sources confirmed that British food standards would not be lowered to accommodate US imports.
The National Farmers’ Union welcomed the protection of UK food standards, but also criticised the level of access the deal has granted US competitors.
“Our biggest concern is that two agricultural sectors have been singled out to shoulder the heavy burden of the removal of tariffs for other industries in the economy”, its president Tom Bradshaw said.
“While we understand this, we also know that today is the start, not the end, of a process and UK agriculture cannot continue to shoulder such imbalances in future negotiations.”
Future discussions
The anticipated reduction of the UK Digital Services Tax on US tech companies hasn’t been agreed yet.
Instead, further discussions to seal a digital trade deal are slated for later in the year, which could also remove paperwork for British firms exporting to the US. Starmer highlighted this during his phone call with Trump, noting the two nations’ are the only ones with “trillion-dollar sectors when it comes to tech”.
The government announcement says that further negotiations will be held to discuss the pharmaceutical sector, as well as the remaining US tariffs. Although it notes that the UK has been guaranteed “preferential treatment” if the US introduces any further reciprocal measures.
‘Welcome news’
The Chartered Institute’s legislation senior adviser, Garima Srivastava, said the agreement was “very welcome news” for UK exporters.
“After years of uncertainty, especially post-Brexit, the removal of steel and aluminium tariffs could breathe new life into the British metals industry. And for car manufacturers, the reduced tariffs, though capped, give a clearer path to the US market.
“Of course, the trade-offs on agricultural access and digital taxes mean the UK is walking a fine line. But this deal signals a fresh momentum in transatlantic trade and businesses would do well to pay attention.”
Srivastava concluded that although “it is not a done deal across the board, it is a strong signal that deeper cooperation could be coming”.
Forgione also praised the plan to focus on digital trade in the future:
“The ambition to negotiate digital trade provisions, including pre-arrival processing and digitalised procedures for movement of goods, reflects the strong results that have been produced by pilots which the UK government has previously co-ordinated, with the Chartered Institute and other partners, to trial digital trade corridor technologies”.
