What the UK-US ‘trade deal’ means for businesses on both sides of the Atlantic

On 8 May 2025, the United States and United Kingdom announced the US-UK Economic Prosperity Deal[1] (“US-UK EPD”), marking a significant development in transatlantic trade relations. This first-of-its-kind framework aims to enhance economic partnership between the two nations based on principles of fairness and reciprocity.

This article examines the key provisions of the US-UK EPD and what they could mean for business in an evolving transatlantic trade landscape. 

Background

The US-UK EPD comes at a time when the US has launched a number of section 232 investigations, which could potentially result in new tariff measures against various countries. The US-UK EPD provides a counterbalance, or modulating mechanism, to address these concerns, offering preferential treatment for UK imports in sectors that might otherwise face tariffs. 

While not a legally binding agreement, like the Free Trade Agreement announced between the UK and India on 9 May 2025[2], the US-UK EPD sets a non-binding framework for future bilateral trade talks between the two countries, and outlines issue areas to work on going forward.  It covers a wide range of areas including market access for automobiles, steel, agriculture, digital trade and pharmaceuticals.

Lowering Tariffs

One of the headline features of the US-UK EPD is a graduated approach to tariff reduction, with initial commitments set upfront in respect of key sectors. For example, the UK has pledged to eliminate a 20% tariff on US beef while introducing duty-free quotas for beef and ethanol imports, signalling fresh opportunities for American agricultural exporters. In return, the US intends to grant modified tariff quotas for UK steel, aluminium, and automotive goods, provided the UK meets supply chain security requirements. 

There is also an emphasis on national security priorities as a requirement for reducing tariffs, with the UK committing to meet US requirements in exchange for steel and aluminium tariffs at most favoured nation rates. 

Removing Non-Tariff Barriers

Beyond tariffs, both governments have committed to curbing non-tariff obstacles that impede trade flow.

International standards Alignment 

The US-UK EPD encourages both parties to assess how they recognise and potentially harmonise international standards, thereby easing regulatory burdens for businesses operating in both markets. In particular, this involves working together on the principles and criteria used to recognise an international standard, and the applicable standards for “mutually agreed sectors of interest” including where standards development organisations already meet “recognised international principles”. 

The significance of this section is hard to judge at this stage. Historically, there have been tensions between US and EU approaches to standard setting, and competition to be the ‘leader’ in influencing international standards bodies (from an EU perspective, this has been in part driven by a push for greater ‘digital sovereignty’). If there is greater UK/US alignment on international standards this could potentially create a divide when compared to the EU (which could, for example, create compliance challenges for businesses operating in the UK and EU markets). Equally, the US could be more interested in building alignment with the UK in the face of perceived geopolitical competition for influence over international standards bodies as emerging markets seek to influence the output of these organisations.[3]   

Equal Treatment on Conformity assessments

Conformity assessments demonstrate that a good or service meets the requirements or standards specified or claimed for that good/service.[4] The US-UK EPD states that each side will treat conformity assessment bodies no less favourably “than that it accords to conformity assessment bodies located in its own territory” covering procedures, criteria, fees and other conditions relating to accreditation and licensing. This could mean that conformity assessment and certification processes for goods/services are more aligned (and possibly streamlined) between UK and US, for example in relation to medical devices, electronics, or services. 

Expanded mutual recognition agreements (“MRAs”) 

MRAs allow better access for exporting businesses to conformity assessments, so that they can test the conformity of their goods against an importing country’s regulations. Under the US-UK EPD, both sides agree to build on existing MRAs relating to industrial goods and work towards an agreement on “services domestic regulation”. This could have broad implications for the UK’s services sectors  in relation to making it easier for businesses to operate across both markets. 

Strengthening Economic Security

The US-UK EPD places particular emphasis on “economic security” as a priority for cooperation, targeting both improved bidirectional access and counteracting non-market policies of third countries like heavy subsidies and forced technology transfers.

In particular, the US-UK EPD establishes proactive commitments to:

• cooperate on export controls, investment screening and ICT vendor security;
• boost participation by their respective businesses in each other’s public procurement processes;
• coordinate efforts to tackle duty evasion and illegal transshipment of goods from third countries subject to trade remedies such as antidumping or countervailing duties. 

By enhancing cooperation in these areas, the UK and US aim to protect their domestic industries and uphold the integrity of their trade measures—effectively turning their commitment to “economic security” into practical, enforceable action.

This is particularly relevant for:

• Third-country technology exports (e.g. semiconductors and chips used for AI development).
• Critical infrastructure (such as telecoms, energy grids, and military hardware).

Over time, these efforts may intensify, adding due diligence layers and screening for companies involved in sensitive sectors.

Digital Trade

The US-UK EPD’s section on digital trade reveals little about the intentions of both sides. Both agree to an “ambitious set of digital trade provisions” without detail on what areas these could cover.

Reportedly, the US attempted to pressure the UK to withdraw its plans for a ‘digital services tax’ as part of this package but there is no mention of this topic in the agreement. Despite no official reference at this stage, it is likely that Artificial Intelligence and the UK’s Online Safety Act are likely to be included in these discussions but the exact scope remains unclear. 

IP

Both parties confirm they intend to discuss high standard commitments to intellectual rights protection (without providing further detail). 

Pharmaceuticals

The inclusion of pharmaceuticals in the US-UK EPD is likely to be particularly significant to both the US and UK given the scale of existing pharmaceutical trade between the countries: according to the UK Office of National Statistics[5], medicinal and pharmaceutical products made up £6.6 billion worth in exports and £4 billion in imports in 2024. 

The US-UK EPD holds the following in relation to pharmaceuticals: 

First, that the US and UK will agree to negotiate “significantly preferential treatment outcomes on pharmaceuticals and pharmaceutical ingredients” (clarity as to what “preferential treatment” the US envisions is possibly found in the subsequently announced HHS Executive Order[6] dated 12 May 2025 which indicates the US will seek Most Favoured Nation (“MFN”) pricing from pharmaceutical companies to bring prices for American patients in line with comparably developed nations).

Second, that this agreement is subject to supply chain security requirements being met by the UK - notably, diversification away from Chinese Active Pharmaceutical Ingredients (or APIs), which are heavily relied on by some UK pharmaceutical companies.

And third, the UK confirms that “it will endeavour to improve the overall environment for pharmaceutical companies” operating in the UK. 

One challenge the industry may contend with as a result of the US-UK EPD includes the question of what conformity, or reducing regulatory divergence, really means. For instance, expediting clinical trials as favoured by the US, may be construed as encouraging reduced scrutiny of clinical trial authorisations, potentially affecting patient safety in the UK. A related consideration, though not within the scope of this agreement, is the effect of the HHS Executive Order on potential supply constraints of pharmaceutical products where MFN pricing affects overall profitability of pharmaceutical products, leading to diminished patient choice. 

Conclusion

The US-UK EPD represents a notable milestone in modernising cross-border trade and collaboration. Its broad commitments on tariffs, market access, conformity assessments, and procurement signal an era of closer economic ties—potentially creating new business opportunities, reducing bureaucratic obstacles, and spurring competitive growth on both sides of the Atlantic.

While certain parts of the agreement remain aspirational, the US-UK EPD’s flexible, non-binding structure allows it to evolve with future discussions. Stakeholders across various industries can expect ongoing developments in trade facilitation, regulatory harmonisation, and economic security. Ultimately, the US-UK EPD’s success will be measured by how effectively it transforms these foundational principles into tangible, mutually beneficial outcomes.

Next Steps

The agreement will be implemented by both sides and negotiations will continue to add detail to the topics under discussion. 

Bird & Bird is monitoring the impact of ongoing discussions for its clients. If you would like to discuss how these developments could impact your business please get in touch with one of our experts. 

[1]https://assets.publishing.service.gov.uk/media/681d327d43d6699b3c1d2a9d/US_UK_EPD_050825_FINAL_rev_v2.pdf

[2]  UK-India Trade Opportunities for UK business under the new Free Trade Agreement - Bird & Bird 

[3] https://www.chathamhouse.org/2019/11/us-china-strategic-competition/power-shift-international-technology-standard-setting

[4] https://www.gov.uk/government/publications/conformity-assessment-and-accreditation-policy-the-uks-quality-infrastructure/conformity-assessment-and-accreditation-policy-in-the-uk

[5] UK trade with the United States - Office for National Statistics

[6] Delivering Most-Favoured-Nation Prescription Drug Pricing to American Patients – The White House