Our trading relationship with the United States is one of the world’s most important. Trade with the US was worth £322 billion in 2024, representing 18% of total UK trade.
In May, we announced the general terms for the UK-US economic prosperity deal. Since then, we have secured the removal of tariffs on civil aerospace exports, and the lowest tariffs of 10% on cars and lumber, and we remain the only country in the world to benefit from a preferential 25% rate on steel, aluminium and derivative exports.
Today we are seeing that relationship strengthened further.
Through productive negotiations with the US, we have secured a zero per cent tariff on all pharmaceuticals exported to the US for three years. This will protect UK-based manufacturing and cement our place as a world leader for life sciences investment.
The agreement has also secured mitigations under the US’s “most favoured nation” drug pricing initiative, which will encourage pharmaceutical companies from around the world to continue to prioritise the UK for early launches of their new medicines, meaning British patients could be among the first globally to access breakthrough treatments. These changes will ensure that the National Institute for Health and Care Excellence is able to continue its world-leading approach to assessing drugs and treatments, and can keep pace with the commercial and economic environment in which pharmaceutical companies are operating today.
The deal will also secure preferential terms for the UK’s medical technology exports for three years, meaning no additional new tariffs on medical technologies in order to unlock further investments in the UK and a further boost to growth.
The UK is the only country with wide-reaching zero tariff commitments on pharmaceuticals. It is clear evidence of the value of the special relationship, and demonstrates that this Government are delivering on our promises in the industrial strategy and life sciences sector plan.
The UK’s life sciences sector is one of our most productive sectors. It not only saves lives but creates jobs, drives investment, and powers innovation across our economy. In 2024, UK exports of pharmaceutical products to the US were worth over £5 billion. The manufacture of pharmaceutical products contributed £25 billion to the UK economy in 2024. This deal will offer security and stability to this extremely valuable sector and will dramatically improve our standings on the global stage as a destination for life sciences investment.
This agreement was supported by the Government’s commitment to investing 25% more in new innovative medicines—the first major increase in over two decades—which will support improved access to new medicines for NHS patients. This deal will be funded by allocations made at the spending review, where frontline services will remain protected through the record funding secured.
This will be achieved through changes to the NICE cost-effectiveness threshold and to the NICE value set—meaning NICE will now be able to approve medicines that deliver significant health improvements but might previously not have been recommended on the basis of current cost-effectiveness thresholds. This could include breakthrough cancer treatments, therapies for rare diseases, and innovative approaches to conditions that have long been difficult to treat. Investing in medicines helps to keep people healthier for longer, reducing pressure on the health service over the longer term and ensuring we have an NHS that is fit for the future. Over time we will increase the spend on medicines in the NHS from around 10% of total spend to around 12%. This will ensure faster and more equitable access of innovative medicines across the country.
We have worked tirelessly alongside the Department of Health and Social Care, and the Department for Science, Innovation and Technology to secure an outcome in our negotiations with the US that reflects the strength of our relationship and delivers real benefits for UK industry and UK patients.
This deal is a huge boost for the UK as a top destination for pharmaceutical investment and growth. Furthermore, it will support our ambition—set out in the life sciences sector plan—for the UK to become Europe’s leading life sciences economy by 2030.
We are continuing intensive discussions on other sectors under section 232 investigation, and on the range of issues outlined in the general terms.
The economic prosperity deal will continue to deliver: saving thousands of jobs, protecting key British industries, and helping to drive economic growth for the UK.
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