On May 8, President Trump and UK Prime Minister Keir Starmer jointly announced the General Terms for the U.S.–UK Economic Prosperity Deal, minting a new acronym — “EPD” — in the process.
The five-page document published that evening outlines a few immediate deliverables as well as a framework for ongoing bilateral negotiations—the first concluded since the April 2 “Liberation Day” tariffs were imposed.
While providing some limited tariff relief, the EPD leaves important questions unresolved. This includes the continued application of the new U.S. 10% blanket tariff on virtually all UK goods; in addition, Britain’s digital services tax (DST) was untouched, despite clear signals that the UK appeared to be willing to eliminate it.
Recommendations
Drawing on input from our members, the Chamber had shared a set of recommendations for these talks with U.S. negotiators. These included:
- Full elimination of “Liberation Day” tariffs;
- Termination of the UK’s DST;
- Binding digital trade rules on data flows and platform governance;
- Recognition of professional qualifications and talent mobility systems;
- Science-based sanitary and phytosanitary rules for agricultural trade; and
- Clear timelines for regulatory convergence in AI, pharmaceuticals, and cybersecurity.
Work Still Needed
While the deal includes some limited market access improvements — for U.S. beef and ethanol exports, for example — the May 8 announcement fell short on several fronts.
Tariffs
- The U.S. will maintain its new 10% baseline tariff on most UK goods. This is especially devastating for small and medium-sized American businesses. According to data from the Commerce Department, there are nearly 19,000 small businesses that import approximately $20 billion in goods from the UK. Leaving the 10% tariff in place means a new $2 billion tax increase on these small businesses. Since the UK’s tariffs are generally low and bilateral trade is nearly balanced, this also suggests the United States will resist entreaties to cut these duties in talks with other countries.
- The two sides agreed on a tariff-rate quota (TRQ) for UK auto exports to the United States. The first 100,000 vehicles per year will face a 10% tariff, and any vehicles above that cap will be subject to the full 25% tariff the United States recently began imposing on imported autos. This quota is roughly equivalent to 2024 UK export volumes to the United States.
- In lieu of the U.S. 25% steel and aluminum tariffs, the U.S. has agreed to “construct a quota at most favored nation (MFN) rates for UK steel and aluminum” and derivative products. The impact of this arrangement will be limited at best, as the UK accounts for approximately 0.3% of global steel production and does not rank among the top 30 global producers of aluminum.
- The agreement indicates the UK will receive “preferential treatment” on potential U.S. Section 232 tariffs on pharmaceuticals and pharmaceutical ingredients, though the nature of that special status is undefined.
Additional Concerns
- Digital Services Tax (DST): Reports more than a month ago suggested that His Majesty’s Government was prepared to reduce the DST for American companies in exchange for relief from U.S. tariffs. Discriminatory DSTs are proliferating around the world, and the UK’s willingness to drop its measure was a much-anticipated bright spot that somehow didn’t materialize. A deal on this front is imperative.
- Digital Trade: The two sides have agreed to negotiate “an ambitious set of digital trade provisions.” This is important in principle, but the deal included no specific language on key topics, including AI and encryption, and no timeline for talks.
- NTBs: Similarly, on other key topics , including non-tariff barriers and regulatory convergence, the deal includes a pledge to negotiate but little in the way of firm commitments that will benefit American farmers, manufacturers, and exporters.
The Bottom Line
While the agreement is a politically significant and diplomatically constructive step forward, it remains fundamentally incomplete and imbalanced in its treatment of key pro-growth priorities. At best, it is the end of the beginning of the negotiations, with a long journey ahead.
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About the author
Marjorie Chorlins
Marjorie A. Chorlins is senior vice president for European Affairs at the U.S. Chamber of Commerce and the Executive Director of the U.S.-UK Business Council.
