On 8 May 2025, President Trump and Prime Minister Starmer unveiled the General Terms for the United States (US)-United Kingdom (UK) Economic Prosperity Deal (EPD), marking a significant step toward strengthening bilateral trade relations and market access. However, both sides recognize that the EPD is a framework to deepen their trade partnership and should not be treated as a legally binding agreement.

The EPD has three key objectives:

1. Boost bilateral trade and job growth
2. Remove business barriers
3. Strengthen the economic relationship between the two nations

This Alert summarizes the EPD's major provisions.

Tariffs

Both the US and UK plan to reduce tariffs on goods important to the other's economies after a reasonable negotiation period. The US will consider extending preferential tariff treatment to UK-associated territories upon request.

The 10% tariffs under President Trump's Reciprocal Tariff Policy will remain in effect.

Agricultural market:

• Beef — The UK will eliminate its 20% tariff on US beef and establish a new 13,000 metric ton duty-free quota.
• Ethanol — The UK will open a 1.4b liter duty-free quota for US ethanol.

Automotive tariffs:

• Vehicles — The US will expand access for UK automotive exports by establishing a quota for 100,000 UK-made vehicles at 10% tariff rate. Imports above the quota will be subject to 25% tariffs.

Steel and aluminum:

• The US will establish a quota for UK steel, aluminum and certain derivative products at most-favored-nation (MFN) tariff rates.

Pharmaceuticals:

• Both countries plan to negotiate significantly preferential trade terms for pharmaceuticals and their ingredients pending the results of the US Section 232 investigation on pharmaceuticals and subject to the UK's compliance with agreed supply chain security standards. (For background, see EY Global Tax Alert, US launches investigation into pharmaceuticals and semiconductors, dated 15 April 2025.)

Non-tariff barriers

The US and UK have committed to a cooperative framework aimed at reducing non-tariff barriers and enhancing regulatory alignment to facilitate trade.

Agricultural trade and standards:

• Both countries will work to improve agricultural market access, maintain compliance with each other's sanitary and phytosanitary (SPS) standards and increase cooperation on issues like export verification and engagement with international standard setting bodies.

Conformity assessment recognition:

• The US and UK will treat each other's conformity assessment bodies no less favorably than domestic ones. This comparable treatment pertains to procedures, criteria, fees and other conditions relating to accrediting and licensing, etc.

Mutual Recognition Agreements (MRAs):

• The US and UK will aim to expand MRAs across selected industrial goods and begin negotiations toward a framework for domestic regulation of services.

International standards and standards development organizations:

• The US and UK plan to align on what constitutes an international standard and will work to mutually recognize standards development organizations (SDOs) in priority sectors.

Increasing digital trade

The US and UK have agreed to negotiate robust digital trade provisions covering digital services and financial services. Negotiations will include paperless trade, pre-arrival processing and digital customs procedures.

Strengthening economic security and collaboration

The US and UK plan to coordinate responses to non-market policies from third countries.

With regard to alignment on investment and tech security, the US and UK intend to cooperate on investment screening, export controls and Information and Communication Technology vendor security.

Regarding government procurement, the two countries reaffirmed commitments under the World Trade Organization Government Procurement Agreement and relevant free trade agreements. The UK still uses new tools, including the National Security Unite for Procurement and powers under its 2023 Procurement Act, to ensure reciprocal, secure access to public procurement markets.

For customs enforcement, the EPD will include measures to combat duty evasion, illegal transshipment and abuses related to antidumping and countervailing duties (AD/CVD), safeguarding the integrity of trade flows.

Actions for businesses to consider

Actions for affected businesses to consider include:

• Review the implications of the US-UK Economic Prosperity Deal to align on your import strategies and compliance obligations.
• Keep up with the latest news and developments in trade policies globally and stay adaptable to quickly respond to changes in trade regulations and tariff rates.
• Engage with legal and trade advisors to navigate the complexities of the new tariff structures and ensure compliance with updated regulations.
• Review contracts with suppliers and customers to clarify contractual liability for duties and taxes.
• Consider renegotiating supplier and customer pricing agreements and/or cost-splitting arrangements.