Partial Implementation of the US - UK Economic Prosperity Deal

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Eversheds Sutherland (US) LLP

[co-author: Marc Lasok-Smith, Eversheds Sutherland (International) LLP Team]

On 16 June 2025, US President Donald Trump signed an executive order confirming and implementing parts of the US-UK Economic Prosperity Deal (“EPD Order”), following the announcement at the G7 Summit earlier this week.

On 16 June 2025, US President Donald Trump signed an executive order confirming and implementing parts of the US-UK Economic Prosperity Deal (“EPD Order”), following the announcement at the G7 Summit earlier this week.

This makes the UK the first (and so far only) country to have reached a trade agreement with the US since President Trump launched his “liberation day” tariffs. As discussed in our earlier briefing covering the draft General Terms of the EPD published on 8 May 2025 (the “General Terms”), the EPD does not constitute a comprehensive free trade agreement, but will offer comfort to businesses in certain sectors, namely automotive, aerospace and agriculture.

In this briefing, we summarise the commitments which have been implemented under the EPD Order, and the current position on commitments which have not yet been put into effect.

Tariffs

Automotive

  • The US has established an annual quota of 100,000 vehicles for UK automotive imports at a 10% tariff rate (7.5% additional plus a 2.5% Most Favoured Nation (“MFN”) rate), rather than the initial 27.5% tariff rate.
  • Imported vehicles over the annual quota will be subject to the increased rate of 25% (i.e. total rate of 27.5%, including the MFN rate).
  • Automotive parts that are products of the UK and are for use in UK vehicles will be subject to a total tariff rate of 10%.

Aerospace

  • UK jet engine and other aerospace products imported into the US are to be spared entirely from US tariffs (i.e. zero rated).

The UK Government has said that it expects the EPD’s provisions affecting the British car and aerospace industries to take effect by the end of the month.

Beef and ethanol

In return for lowering of tariffs in key sectors, the UK will increase market access worth billions of US dollars for imports from the US, particularly beef, ethanol, and certain other US agricultural products. However, previous details on beef and ethanol tariffs and quotas in the General Terms have not been repeated in the EDP Order.

Aluminium and steel

MFN tariff rate quotas for UK steel and aluminium articles and derivative steel and aluminium articles were provided for in the General Terms. However, these have not been implemented yet under the EPD Order. Both governments have pledged to “make progress towards 0% tariffs on core steel products as agreed”.

Pharmaceuticals

Both Governments remain committed to negotiating preferential treatment outcomes for pharmaceuticals and pharmaceutical ingredients originating from the UK as per the General Terms, but this remains subject to the findings of a Section 232 investigation and the UK's compliance with certain supply chain security standards.

Other EPD Order terms

The position in relation to non-tariff barriers, as well as digital trade, economic security and national security, remains consistent with the earlier announcement as outlined in our previous briefing on this topic (see here). No further clarity has been provided by the ordered Order, except to say that “the UK will reduce or eliminate numerous non-tariff barriers that unfairly discriminate against American products, hurt the US’ manufacturing base, and threaten the national security of the United States”.

Commentary

The implementation of the above-mentioned parts of the EPD, in particular as they relate to the UK automotive and aerospace sectors, is a welcome development for UK businesses and represents the reassertion of a more positive, trade-friendly relationship between the UK and US.

Whilst the rest of the General Terms have not yet been implemented, it is reassuring to see that the EPD Order retains a commitment in relation to the steel, aluminium and pharmaceutical sectors to continue negotiations and achieve favourable outcomes as previously reported.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Attorney Advertising.

© Eversheds Sutherland (US) LLP

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