The US/UK Trade Agreement: A One-Off Special or Precedent for Other Trade Deals
By Samantha Valentino, Global Market Risk Analyst
August 14, 2025
On June 16th, 2025, President Donald Trump signed an Executive Order outlining the new United States-United Kingdom Prosperity Deal. This marks the first trade deal to be signed by the new Trump administration and the first signed since Trump announced global tariffs on “Liberation Day” ,April 2, 2025. While some details of the agreement include tangible commitments, it is mostly comprised of promises for future, undated action. More importantly, it was seen as a possible template for other trade deals, but this was not the case. Indeed, the US-UK trade deal appears to be a special deal that has not been offered to any other countries (so far).
The details of the trade agreement are as follows:
The UK agrees to buy more US goods, such as beef, ethanol, and agricultural products, and remove regulations that “unfairly discriminate” against American products.
The US has agreed to decrease car export tariffs from 27.5% to 10% for the first 100,000 UK-produced cars to enter the US in a year. Any following cars will face an up to 25% tax. Additionally, the US committed to removing taxes on the aerospace industry from 10% to 0%- including engines and aircraft parts.
Additionally, the UK is the ONLY country to avoid the steel and aluminum global tariff of 50%, which the US will waive for the UK. Contingent on a Section 232 investigation, the United States will allow for special advantages for UK pharmaceuticals in US markets. They will also look to work through any future Section 232 concerns in the future, ensuring economic cooperation and predictability.
Pointedly, this is the first US deal that has focused on the car industry, and one of the reasons observers were hoping it would be reflective of where the US was going to come out in trade negotiations with Japan and South Korea, both major auto manufacturing companies. This is a big win for the UK, especially as it promises to stabilize and perhaps grow employment in that industry.
Additionally, the steel and pharmaceutical industries are looking at potential boosters from this deal. For the US, this deal is as significant as it reduces inequitable treatment in the UK for US producers and a boost in sales for the beef, ethanol, and agricultural sectors..
Currently, the US has followed through in lowering tariffs for the car industry, but they have yet to lower steel tariffs. As noted above, much of the rest of the deal remains up to future deliberations.
However, this is still a notable trade deal because it affirms the positive relationship that President Trump has with the UK. Trump’s willingness to sign a trade deal with the UK and not the EU is significant and reveals his willingness to work towards a strong economic alliance with the UK. The US will likely pursue further trade deals with the UK, especially due to expressed disappointment with the UK’s current Digital Services Tax, which remained unchanged with this current trade deal.
Watch for Trump’s second state visit to Windsor Castle, which is out of the ordinary, considering no other US president has ever been invited out for a second state visit. This visit is expected to take place in September and could yield more trade agreements or even talks of free trade. While the US only has free trade with 20 countries through 14 agreements and Trump’s universal 10% tariff is still in place, there could be future talks of free trade.
