US-UK Trade Deal Locks in 10% Tariff Rate, Offers Modest Relief for Exporters in Landmark Economic Prosperity Agreement
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US-UK Trade Deal Locks in 10% Tariff Rate, Offers Modest Relief for Exporters in Landmark Economic Prosperity Agreement
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Just last week, the White House announced that the United States and the United Kingdom have agreed on a framework for what’s now being called the U.S.-UK Economic Prosperity Deal. This marks the first formal trade framework from President Trump’s administration since his sweeping “Liberation Day” tariffs were announced on April 2, 2025. Those tariffs imposed a flat 10% rate on all imports to the United States—a dramatic shift in global trade policy. According to the Council on Foreign Relations, this tariff remains locked in as the baseline rate in the new agreement, with no immediate relief for UK exporters. The UK has had to accept the 10% tariff, making this the de facto Most Favored Nation rate for the U.S.
The Economic Prosperity Deal isn’t all one-sided, though. The UK has agreed to drop its own tariffs on U.S. goods, cutting them from an average of 5.1% down to just 1.8%. As reported by Supply Chain Dive, both nations are planning further negotiations to decrease other tariffs on a preferential basis over time, but until a final agreement is signed, these changes are not binding.
In terms of sector-specific impacts, cars and agriculture are in the spotlight. Under the deal’s auto provisions, the first 100,000 UK-made cars imported into the U.S. annually get hit with the standard 10% rate. Any UK-made cars above that quota face a stiff 25% tariff. Meanwhile, the UK’s own agricultural tariffs—which average 9.2% and can soar past 125% for certain meat and dairy products—are under review, as U.S. farmers and exporters seek new access to British shelves.
The Budget Lab at Yale reports that while the deal is historic, its immediate effect on the average tariff rate is modest. As of this week, U.S. consumers still face an effective tariff rate of 17.8%, the highest since the 1930s, with only minor reductions attributed to the U.S.-UK agreement. The broader economic hit from all 2025 tariffs adds about 1.7% to consumer prices, translating to an average household loss of $2,800 in 2024 dollars.
Governor Brad Little praised the deal, saying it ushers in a golden age of opportunity for U.S. exporters, especially as the administration recognizes UK efforts to tackle global steel excess and negotiates a new trading union for steel and aluminum. The hope is that this sets a positive tone for future talks with other trading partners, but the UK’s inability to move the needle on the 10% U.S. tariff is a sobering signal for allies watching from the sidelines.
Listeners, that wraps up today’s tariff news on the ever-shifting trade landscape between the U.S. and the United Kingdom. Thank you for tuning in and don’t forget to subscribe. This has been a quiet please production, for more check out quiet please dot ai.
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