The UK and US trade deal – what does it mean?

The US-UK Economic Prosperity Deal introduces key cuts to car and aerospace tariffs but uncertainty over steel, pharmaceuticals and other goods remain. John O’Loughlin delves into the details

On Monday, 16 June, US President Donald Trump signed an executive order implementing the General Terms of the United States of America–United Kingdom Economic Prosperity Deal.

While not a fully formed trade deal, the arrangement provides for the preferential tariff treatment of UK goods in several industries.

 Automobiles and automobile parts

Tariffs on automobiles and automobile parts will fall from the existing 27.5 percent rate (i.e. 25% Section 232 rate plus 2.5% most favoured nation rate) in place since April, to a rate of 10 percent (7.5% Section 232 rate and 2.5% most favoured nation rate).

The quota of 100,000 cars per year represents the total number of cars imported into the US from the UK in the previous year.

Aerospace tariffs

Section three of the executive order deals with aerospace. It provides that any UK-originating products falling under the World Trade Organisation Agreement on Trade in Civil Aircraft (WTO Aviation Agreement) will no longer be subject to tariffs.

The WTO Aviation Agreement includes all civil aircraft (excluding military aircraft) and civil aircraft engines, including the parts of such engines, components and sub-assemblies.

Other UK imports

In line with the US “reciprocal” tariff plan, all other imports from the UK remain subject to the 10 percent baseline tariff.

In the general terms of the trade deal, the US and UK commit to negotiating significantly preferential treatment outcomes on pharmaceuticals and pharmaceutical ingredients produced in the United Kingdom.

This is, however, contingent on the findings of an investigation regarding pharmaceuticals and pharmaceutical ingredients under Section 232.

The agreement activates elements of a broader pact reached last month and follows negotiations aimed at easing the impact of US tariffs on British businesses.

The UK government hopes the deal will offer some protection to key industries. Speaking earlier this month at the G7 Summit in Canada, UK Prime Minister Keir Starmer described the trade pact as a “very important day” for both nations.

US steel tariffs on UK imports

While no direct agreement has been reached on steel and aluminium tariffs, the executive order does outline that a tariff-rate quota will be “designed and established” in consultation with the United States Trade Representative.

As such, US imports of these products from the UK remain subject to a 25 percent tariff.

The US administration’s recent order indicated plans to establish a similar framework for steel and aluminium trade, though specific details have yet to be disclosed.

When asked if tariffs on UK steel would be lifted, US President Donald Trump responded, “We’re gonna let you have that information in a little while.” He added that the UK was “very well protected,” citing his personal affinity for the country: “You know why? Because I like them.”

The UK government stated it would “continue to go further and make progress towards 0 percent tariffs on core steel products as agreed.”

Earlier this month, the UK was temporarily exempted from a planned 50 percent tariff increase, but this exemption will expire on July 9 unless a new agreement is reached.

Irish and global impact

Irish exports to the US dropped 62 percent in April after President Donald Trump imposed sweeping tariffs on all US imports originating in the European Union.

According to the latest Central Statistics Office (CSO) data, Irish exports to the US fell by €16 billion in a single month following the announcement of the so-called “liberation day” tariffs.

The value of global Irish goods exports fell by 43 percent in April, dropping to €21.9 billion from a record high of €38.1 billion in March, according to the CSO latest figures.

Despite the sharp month-on-month decline, exports were still up €2.5 billion on April 2024, indicating continued year-on-year growth.

From January to April 2025, medical and pharmaceutical products accounted for 60.2 percent of total Irish exports, amounting to €66.9 billion. This marks a 117 percent increase compared to the same period in 2024.

Globally, exports of medical and pharmaceutical products also saw a significant month-on-month decline in April, falling by €12.8 billion (54%).

The introduction of US tariffs has disrupted global trade flows. Notably, the value of Irish goods exports rose by 44 percent in the first quarter of the year, as multinational companies based in Ireland rushed to stockpile products in the US ahead of the tariff implementation.

Donald Trump’s threat to impose 50 percent tariffs on most EU goods imported in the US has been temporarily delayed until 9 July to allow time for negotiations.

It remains to be seen how these negotiations will unfold and how Trump’s tariff plans will continue to impact global trade flows in the months ahead.

John O’Loughlin is Partner, Global Trade and Customs, PwC Ireland