The U.S.-UK Trade Deal – So Far

On this 4^thof July, Britain was also celebrating. The first country to secure a trade deal with the Trump Administration, the U.K. can indeed celebrate the so-called Special Relationship.

But what exactly is in the deal?

For starters it’s not a free trade agreement in the traditional sense. Rather, it’s more like a starter pack, with both sides making certain commitments, while leaving most of the details to be worked out later. But understanding what’s been agreed so far, and what’s still yet to come will help transatlantic companies position themselves in this new normal.

The Deal:

The UK agreed to eliminate tariffs on American ethanol and reduce tariffs on American beef, while the U.S. committed to carving out certain key British goods from its general imposition of 10% tariffs, namely:

1. Aerospace:

Context: the UK is one of the U.S.’ leading suppliers of aircraft parts.

What changed: As of 30 June 2025, the U.S. eliminated all tariffs on UK aircraft engines and parts, previously set at 10%.

Crowell Comment: This relief will help alleviate supply chain bottle necks and reduce procurement costs for OEMs. But it is still unclear if there will be any further trade controls on UK aircraft parts. The U.S. Department of Commerce has opened a section 232 investigation into imported aircraft parts to determine whether they harm national security. While the UK has promised to address those concerns, it still remains unclear what exactly that entails. Meanwhile, in exchange for tariff relief, UK airlines are expected place new orders with U.S. aircraft manufactures.

2. Automotive:

Context: the U.S. is the largest market for British cars, globally.

What changed: As of 30 June 2025, the U.S. reduced tariffs on UK car exports from 27.5% to 10% for up to 100,000 vehicles annually, closely matching the UK's total car exports to the United States last year.

Crowell Comment: While the relief brings much needed comfort to UK car manufacturers and their employees, the deal does not yet remove the 25% tariff on auto parts. The UK has indicated a willingness to reduce its own 10% tariff on American car imports, but this has not yet been confirmed.

3. Steel and Aluminium:

Context: For UK steel, the U.S. is the second largest market. The U.S. meanwhile is concerned that Chinese steel could enter its market through third countries.

What changed: The U.S. will eliminate the 25% tariff on UK steel and aluminium in exchange for the UK ensuring that its steel exports are melted and poured in Britain.  

Crowell Comment: The precise conditions of the relief are still being discussed, including the “melt and pour” parameter. On the one hand, the U.S. wants to prevent steel from other countries (especially China) from being minimally processed in the UK and then exported to the U.S. tariff-free. On the other hand, many UK steel mills import semi-finished products for further processing and export. The formal agreement will have to clarify how country of origin is determined and may in turn require exporters to disclose their supply chain partners and ownership structures. For those companies sourcing steel and aluminium, tracking how different countries are affected by the new tariffs will be of utmost importance.

What hasn’t changed:

• The deal does not remove the United States’ general 10% tariffs, which remains in place for most British products outside the specified quotas and sectors.
• The deal does not address technology companies’ concerns about the digital services tax being levied on companies not headquartered in the UK, but still generating UK revenue.
• The deal does not provide American companies with additional access to the UK’s National Health Service, one of the largest purchasers of pharmaceuticals and medical devices globally.

Next Steps:

• Both countries have agreed to streamline customs procedures and reduce non-tariff barriers.
• On-going negotiations are planned for pharmaceuticals, digital trade, and investment security, with a commitment to develop a digital trade agreement.
• The UK’s digital services tax remains unchanged for now, but both sides have agreed to further talks.
• The drafted agreement will require U.S. Congressional and UK Parliamentary approval to take effect.