US trade tariffs

Since taking office on 20 January 2025, President Trump has introduced wide-ranging tariffs on goods imported into the US, including from the UK. Tariffs are taxes on imports, which are paid by importing businesses in the country where they apply.

The US tariffs, together with the responses of the US’s trading partners has led to a much more uncertain outlook for world trade. This has prompted the UK Government to reassess its trade strategy and choose a pragmatic approach:

the mood has taken a protectionist turn around much of the world, threatening the familiar rules of the trading game and marginalising aspects of the multilateral architecture. These are not all changes the UK would have chosen, but it is our duty to, first, understand them – and then chart a pragmatic way forward to allow traders across every corner and every nation of the UK to survive and thrive in the new world.

On 8 May 2025, the UK and the US governments announced the general terms of an Economic Prosperity Deal (EPD), aimed at mitigating the impact of US tariffs on UK industries and deepening bilateral economic ties. The terms of the agreement have only been partially implemented so far and are designed to evolve over time.

Its general terms include commitments to reduce tariff and regulatory barriers across sectors such as agriculture, automotive, steel and aluminium, pharmaceuticals, digital trade, and aerospace. It includes mutual quotas on beef and the UK agreeing to import 1.4 billion litres of US bioethanol tariff-free. Under the deal, the UK could see the current 25% rate on steel, aluminium and derivative goods removed, contingent on meeting US supply chain security requirements. The UK can also export up to 100,000 passenger vehicles to the US at a 10% tariff. Pharmaceuticals can now enter the US tariff-free, in return for UK commitments to adjust domestic pricing policies. The deal also opens the possibility of exemptions for semiconductors and some other goods from future US tariffs.

A 10% tariff applies to most other UK goods imported into the US. Following the US Supreme Court’s decision on 20 February 2026, the legal basis for several US tariffs has changed, and it remains unclear whether this tariff will be maintained or altered under the new framework. For details, see below.

Details of the tariffs

President Trump has introduced a range of tariffs affecting most countries. The following measures have the most pronounced effect on UK industries:

• On 12 March 2025, President Trump imposed a 25% tariff on all aluminium, steel and derivative goods imports. This was raised to 50% on 4 June. In August, the US extended the scope of the tariff to cover a wider range of goods containing steel and aluminium.
• From 3 April, a 25% tariff on passenger vehicles and light trucks. A 25% tariff on automobile parts followed on 3 May.
• On 2 April, “reciprocal tariffs” ranging from 10% to 50% were announced for most countries, with rates depending on perceived trade imbalances. A 10% baseline tariff was applied to imports from the UK from 5 April.

  The “reciprocal tariff” refers to the tariffs the U.S. planned to impose on most countries that contribute to its persistent trade deficit, affecting most goods. Goods already subject to steel, aluminium and automobile duties in the US are exempt from the 10% tariff. The tariff does not currently apply to certain critical minerals and pharmaceutical products not available in the US.

• From 30 July, a 50% tariff on copper and its derivative products.
• From 29 August 2025, the $800 de minimis threshold for commercial imports removed, meaning low-value shipments are now subject to tariffs, including goods previously exempt.
• From 14 October, a 10% global tariff on timber (lumber) with tariffs ranging from 25% to 50% applied to various wood products, including furniture.
• From 17 October, a 25% tariff on medium- and heavy-duty trucks and truck parts.
• From 14 January 2026, a 25% tariff on specific semiconductors re-exported to China, while continuing negotiations with some other countries.

The US government is investigating tariffs on pharmaceuticals. President Trump announced on 26 September that a 100% tariff may be imposed on these two categories.

As part of the EPD talks, the UK government is currently negotiating or has agreed tailored exemptions from these tariffs.

Before these announcements, US tariffs were generally very low, averaging 2.2% (PDF), although tariffs on some individual products (such as certain agricultural goods) were much higher.

Legal and economic rationale behind the tariffs

The US has used two main legal grounds to justify the announced tariffs according to its domestic law:

• National security concerns under section 232 of the Trade Expansion Act of 1962: the US Department of Commerce reported that imports of steel, aluminium, automobiles and automobile parts posed a threat to US national security, allowing the President to implement tariffs. This rationale also underpins tariffs on copper and timber, as well as investigations into pharmaceutical, semiconductor and some other imports.
• National emergency under the International Emergency Economic Powers Act (IEEPA): Mr Trump declared a national emergency to address multiple issues, including fighting illegal immigration and drugs, increasing US competitiveness, protecting the country’s sovereignty and strengthening its economic and national security.
  
  On 20 February 2026, the US Supreme Court ruled that the IEEPA does not authorise the president to impose tariffs, thus removing the legal basis for the reciprocal and various other tariffs. Following the court’s decision, the US President signed a proclamation imposing a new global tariff of 10% on most imports under section 122 of the Trade Act of 1974. These tariffs are valid for 150 days, unless the US Congress extends the term. It is not clear how this change will affect trade deals the US has reached with other countries, including the UK.

The Trump administration has identified different economic reasons to support the imposition of tariffs:

• Increase jobs in the US manufacturing sector and protect US industries: this idea underpins the America First Trade Policy aiming to benefit “American workers, manufacturers, farmers, ranchers, entrepreneurs, and businesses”.
• Attract companies to invest and set up factories in the US to increase US manufacturing.
• Raise revenue that can finance tax cuts: in his inaugural address, President Trump stated his goal of imposing tariffs and taxes on foreign countries to enrich US citizens.
• Reduce the trade deficit in goods. The Trump administration affirms that the US has a “large and persistent annual trade deficits in goods”, which it says has economic and national security implications.
• Address perceived unfairness of global trading system: the Trump administration argues that the deficit in goods results from a lack of reciprocity that creates an unfair trading system where the US opens its markets to foreign products while its trading partners keep theirs closed for US exports. The “reciprocal tariffs” would be a way to rebalance US trade relations.
• Agree on trade deals with the most affected countries to decrease their tariffs and other regulations on American imports.

UK trade with the US

The UK exports more to the US than to any other single country. In 2024, UK exports to the US were worth £66 billion, 17% of all UK goods exports. The next largest market is Germany which accounted for £33 billion of goods exports (8% of the total). The UK exported £184 billion of goods to the EU as a whole in 2024 (47% of the total).

Major categories of goods exported from the UK to US include medicinal and pharmaceutical products (£11 billion over the year to September 2025 (PDF)) and cars (£9 billion).

UK exports of services to the US exceed exports of goods. The UK exported £135 billion of services to the US in 2024. Major UK services exports to the US include “Other business services” such as accounting and business consultancy (£61.5 billion in the year to September 2025) and financial services (£28.9 billion).

The US imports more goods than it exports, leading to a trade deficit. This is one of the reasons behind President Trump’s tariffs. The UK government has emphasised that UK–US trade in goods is balanced. In 2024, the UK exported £66 billion of goods to the US and imported £58 billion.

UK Government reaction

Following the February 2025 meeting between the UK Prime Minister and President Trump, the US and UK started negotiations for an economic prosperity deal that builds on “shared strength and economic security”.

The government wants to continue to engage with its US counterparts “in a constructive and mature dialogue” to address the situation. Keir Starmer said on 2 April:

We are taking a calm, pragmatic approach and keeping our feet on the ground. Constructive talks are ongoing on a wider economic prosperity deal with the US.

The US-UK economic prosperity deal (EPD)

On 8 May 2025, the UK and the US announced the general terms of a trade deal designed to deepen bilateral economic ties. The legally non-binding agreement seeks to lessen the impact of US tariffs on UK industries affected by a 25% tariff on all aluminium, steel and derivative goods imports, 25% tariff on all passenger vehicles and a 10% baseline tariff on imports from the UK, affecting most goods. It also protects the UK from possible tariffs on semiconductors and pharmaceuticals.

This trade deal, known as the US-UK economic prosperity deal (EPD) (PDF) focuses on sector-specific tariff reductions and regulatory cooperation.

The document released by the two countries provides the general terms for the negotiations of the US-UK EPD, highlighting their shared aspirations. This means the UK and the US are negotiating an agreement that will formalise the announced proposals. Discussions between the two governments are ongoing. The terms of the agreement have been only partially implemented so far.

The UK and US also agreed a Tech Prosperity Deal in September 2025 under which they will cooperate on advanced technologies, including AI, quantum computing and nuclear. In December 2025, the US government suspended the implementation of the memorandum of understanding because it was unhappy with progress on wider trade negotiations, particularly the UK’s reluctance to address non-tariff barriers. Reported concerns include the UK’s position on US food safety standards, its digital services tax and online safety regulation. The Financial Times reports that collaboration on civil nuclear technologies under the deal restarted in February 2026.

Main issues covered

The general terms for the US-UK EPD list both countries' intentions concerning a future agreement. The UK and the US also recognise that the EPD can be expanded over time to cover additional areas. The main issues the two nations are discussing are:

• Agriculture: the UK will remove a 20% tariff within a quota of 1,000 metric tons on US beef and open a duty-free quota of 13,000 metric tons on US beef. It will also grant a duty-free quota of 1.4 billion litres for U.S. ethanol. In exchange, the US will reallocate to the UK 13,000 metric tons of its existing “Other Countries” tariff rate quota for beef.
• Automotive sector: the US will reduce tariffs from 25% to 10% on up to 100,000 UK-made cars annually, also benefiting auto parts.
• Steel and aluminium: the US will eliminate the 25% tariff on UK steel and aluminium imports, creating instead a quota at most favoured nation (MFN) rates for UK steel and aluminium and some of their derivatives. This is conditional on the UK meeting the US requirements on the security of supply chains on exports to the US.
• Pharmaceuticals: subject to findings of a US Section 232 investigation on national security grounds, both sides intend to negotiate preferential tariff treatment. This is also conditional on the UK complying with supply chain security requirements. Additionally, the UK will work on improving the domestic environment for pharmaceutical companies.
• Non-tariff barriers: both nations confirmed the importance of complying with the importing country’s sanitary and phytosanitary (SPS) standards and other mutually agreed standards. The parties also intend to recognise each other’s conformity assessment bodies.
• Digital trade: the UK digital services tax remains unchanged, despite US criticism. Both countries committed to negotiating ambitious digital trade rules and paperless trade provisions.
• Aerospace: this is an adjacent issue not included in the general terms. During the press conference to announce the EPD, US commerce secretary, Howard Lutnick, asserted that the US will lift tariffs on UK aerospace components.

Implementation of the general terms

For the UK, industries like automotive, steel, and aerospace can benefit from reduced tariffs, and increased access to the US market. On 16 June, President Trump signed an executive order implementing some of the general terms of the EPD. This instrument mainly benefits the UK automotive and aerospace sectors. It establishes an annual quota of 100,000 automobiles subject to a 10% tariff. Automotive parts will be subject to a tariff of 10%. The US will not apply tariffs to imports of certain aerospace components such as jet engines from the UK.

On 1 December, a deal was announced allowing the UK to export medicinal and pharmaceutical products tariff free to the US for a minimum of three years. According to the “agreement in principle”, the US will exempt UK-origin pharmaceuticals, pharmaceutical ingredients, and medical technology from further tariffs that may follow from section 232 national security and section 301 unfair trading practices investigations during President Trump’s term.

In response, the UK will increase the NHS budget for innovative branded medicines by 25%. The US Trade Representative also said the UK will act to ensure higher prices for new medicines are not significantly reduced by portfolio-wide concessions. Starting from 2026, the percentage of sales revenue that pharmaceutical companies must repay to the UK Government under the Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAG) or other rebate schemes would fall to 15% and remain at or below that level for the duration of the scheme. The “preliminary understanding on pharmaceuticals trade and pricing” was published on 2 April 2026. Further details are in our briefing, What is the UK–US pharmaceuticals deal?

It’s not clear when other arrangements, including those for steel and aluminium, will come into force. From 4 June, the US doubled its import tariffs on steel and aluminium to 50%, but the UK was given a temporary exemption, retaining the 25% tariff, contingent on the progress of the EPD negotiations. The government confirmed on 13 October that the tariff on steel, aluminium and derivative products will remain at 25% while negotiations continue.

Further talks are addressing “the national security threat in the copper sector” and other sectors, including semiconductors and heavy trucks. When on 14 October the US introduced higher global tariffs on timber (lumber) and related goods, it confirmed that tariffs on UK exports will not exceed 10%.

The 10% baseline tariff implemented by the Trump administration remains on most UK goods. While this rate is lower than the reciprocal tariffs applied to imports from other countries, some, such as the EU, have negotiated more favourable terms on certain goods. The EU and Japan have reached tariff agreements with the US, reducing their tariff to 15%, from 20% and 24% respectively, with further exemptions for certain goods. As observed by the Business and Trade Committee, the UK's relatively less favourable terms may erode its competitive position in the US market, particularly in sectors such as agrifoods.

The UK and the US continue to negotiate the specific terms of the EPD. The goal is to formalise and implement the proposals.

Following the US Supreme Court's 20 February 2026 ruling on the legality of certain US tariffs, the US government said it will honour prior bilateral agreements. The UK Minister for Trade confirmed on 6 March that the UK remains on the 10% global tariff rate and retains previously agreed sector specific advantages, including on steel, pharmaceuticals and autos.

Commentary

Trade experts have raised concerns about the lack of predictability of the general terms and their non-binding nature, which generates uncertainty among businesses, as well as their compatibility with WTO rules.

They also see the US-UK deal as a US step towards excluding China from global supply chains. The commitments on national security priorities and the security of supply chains raise questions about the position of the UK in the current geopolitical context. The UK would have to find a diplomatic balance between two important trade partners: the US and China.

Parliamentary committees

The House of Lords International Agreement Committee’s letter to the government on the general terms of the EPD (24 July 2025) focused on the deal’s impacts on the steel sector, the automotive quota, the effect on the UK bioethanol sector, maintaining food standards and other issues. It wrote about the EPD’s consistency with WTO rules. It recommended avoiding commitment “to comply with unclear US supply chain security requirements” and other measures that could affect the UK’s flexibility to negotiate with other trading partners.

Both the International Agreements Committee (IAC) and the Commons Business and Trade Committee have urged clarity about the parliamentary scrutiny of the EPD, as the legal form of the future deal remains uncertain, and the current free trade agreement scrutiny processes may not apply. In its 4 September response to the IAC letter, the government said the final agreement “will be scrutinised by Parliament in line with established procedures” applicable to free trade agreements.

In the report published on 14 September 2025, the Business and Trade Committee welcomed the progress in EPD negotiations but also urged the government to maximise efforts to agree the final terms. It noted that only a lasting agreement would offer the level of certainty UK businesses and investors require. It noted the EPD’s strategic place in the UK’s broader economic and foreign policy strategy. BTC recommendations included monitoring of the automotive quota, minimising tariffs for UK steel, aluminium and their derivative exports, and pharmaceutical exports.

Further information

Peterson Institute for International Economics, Trump's trade war timeline 2.0: An up-to-date guide

Department for Business and Trade, Trade and Investment Factsheets: United States (PDF), 26 March 2026

Commons Library research briefing, CBP-10316 What is a trade deal? UK-US trade talks since 2020