US-UK Trade Deal Explained: What this FTA means for Global Trade in 2025

Amid global tariff tensions, the U.S.-UK reached a historic trade deal. The UK and US declared a free trade agreement in the scheme for an Economic Prosperity Deal on 8 May 2025, setting the stage for renewed negotiations. Based on the global trade database, the total value of trade between the US and the UK amounted to $149.2 billion in 2024. According to reports on US import data and UK export data, the value of goods imported by the US from the UK in 2024 amounted to a record $69.26 billion, while US exports to the UK reached an all-time high of $79.94 billion, as per the latest US export data. The US-UK Trade Deal, also known as the Free Trade Agreement (FTA), has sparked interest worldwide as it could have significant implications for global trade dynamics in 2025 and beyond. Let's dive into what this UK trade deal with US or the US and UK trade deal entails and what it means for the future of trade on a global scale.

Background of the US-UK Trade Deal

The negotiations for the US-UK free trade deal began after the UK officially left the European Union in 2020. Both countries have expressed their desire to strengthen economic ties and enhance trade relations outside of the EU framework with the US-UK trade deal Trump-Starmer. The US-UK free trade deal, or the US-UK FTA, finalized in May 2025, aims to eliminate trade barriers, reduce tariffs, and promote bilateral trade between the US and the UK, which will further impact the UK-US trade statistics and the global trade data.

What does the UK-US Free Trade Agreement mean for the US?

• This agreement in principle significantly expands U.S. market access in the UK, opening up a $5 billion opportunity for American exporters, including farmers, ranchers, and producers.

• It includes over $700 million in ethanol exports and $250 million in various agricultural items like beef.

• The agreement commits both nations to work together to improve access to industrial and agricultural markets.

• It ensures more efficient customs procedures for U.S. exports.

• Both countries agree to pursue high-standard commitments in areas like intellectual property, labor rights, and environmental protection.

• The agreement includes plans to negotiate a comprehensive set of rules for digital trade.

• It enhances U.S. competitiveness and reinforces the resilience of the American supply chain.

• It supports a stable and secure supply chain for pharmaceutical goods.

• This trade deal between the U.S. and the UK is expected to start a promising new chapter for U.S. exporters and U.S. producers.

Key Features of the US-UK Trade Deal

• Tariff Reduction: One of the main objectives of the trade deal is to reduce or eliminate tariffs on a wide range of goods and services traded between the US and the UK. This would make products more affordable for consumers and increase market access for businesses in both countries.

• Regulatory Alignment: The trade deal also focuses on aligning regulatory standards and practices to facilitate smoother trade flows. This includes agreements on intellectual property rights, food safety standards, and environmental regulations.

• Market Access: The new US-UK trade deal will improve market access for businesses by removing barriers to trade, such as quotas and restrictions on certain products. This will create new opportunities for exporters and importers in both countries.

• Digital Trade: Another important aspect of the trade deal is the promotion of digital trade and e-commerce. This includes provisions for protecting online data, preventing cybercrime, and enhancing cooperation in the digital economy.

Key Highlights of the 2024-25 US-UK Trade and FTA

• Total US Trade with UK - Bilateral Goods Trade (2024): $149.2 billion

• U.S. Goods Exports to UK (2024): $79.9 billion (+7.6% from 2023)

• U.S. Goods Imports from UK (2024): $69.2 billion (+6.0% from 2023)

• U.S. Trade Surplus with UK (2024): $11.9 billion (+17.4% from 2023)

• UK Exports to U.S. (Goods & Services): £182.6 billion

• UK Imports from U.S. (Goods & Services): £111.2 billion

• Projected New U.S. Export Opportunities: $5 billion annually, including:

• $700 million in ethanol

• $250 million in beef and other agricultural products

• Tariff Reductions:

• Steel: 25% → 0%

• Automobiles: 27.5% → 10% (for up to 100,000 vehicles annually)

• UK's Concessions:

• Lowered tariffs on U.S. beef and ethanol

• Maintained food safety standards

• Digital Services Tax: Remains a contentious issue; potential bargaining chip in future negotiations.  

US-UK Bilateral Trade in the Last 10 Years: Yearly US Import-Export Data

Top 10 U.S. Exports to the United Kingdom (2024)

In 2024, the top 10 U.S. exports to the United Kingdom showcased a diverse range of products that played a significant role in bilateral trade relations between the two countries. Mineral fuels and oils are the biggest export commodity from the US to the UK, as per the data on US exports to the United Kingdom by HS code. The list included items such as machinery, pharmaceuticals, aircraft, medical equipment, organic chemicals, and electronics. The top 10 goods that the US exports to the UK, as per the US export data and US shipment data for 2024-25, include:  

Top 10 U.K. Exports to the United States (2024)

In 2024, the United Kingdom continued to strengthen its economic ties with the United States through its top 10 exports. Among the leading exports from the U.K. to the U.S. were automobiles, pharmaceuticals, machinery, beverages, and electronic equipment. These exports not only showcase the diversity of the U.K.'s industrial base but also highlight the significance of the transatlantic trade relationship. Machinery is the most imported product by the US from the UK, as per the data on US machinery imports from the United Kingdom. The top 10 goods that the UK exports to the US, as per the United Kingdom export data and the UK trade shipment data for 2024-25, are mentioned in the table below: 

Sectoral Impacts of the US-UK FTA

Industrial Goods

Steel & Aluminum:

• Tariffs eliminated

• UK exported 180,000 tons to the U.S. in 2024, worth £370 million ($492 million)

Automotive:

• Tariffs reduced to 10% for the first 100,000 UK vehicles exported to the US annually

• Exports beyond this cap remain subject to a 25% tariff

Agriculture

• U.S. Exports to the UK:

• Increased access for beef, ethanol, and select dairy products

• The UK maintains strict food safety standards

• UK Exports to U.S.:

• Improved market access for certain agricultural products

Digital Trade

• Digital Services Tax:

• The UK's £800 million tax on digital services remains a point of contention

• Potential leverage in future trade negotiations

Trade Trends & Shipment Data

• UK Exports to U.S. (Feb 2025): £8.71 billion

• UK Imports from U.S. (Feb 2025): £6.87 billion

• Trade Balance (Feb 2025): £1.83 billion surplus for the UK

• U.S. Exports to UK (Q1 2025): $23.69 billion

• U.S. Imports from UK (Q1 2025): $18.57 billion

• Trade Surplus (Q1 2025): $5.12 billion for the U.S. 

  

Global Trade Implications for 2025

• Model for Future Agreements: This FTA could serve as a template for future U.S. trade agreements, especially in the absence of deals with major partners like China.

• Supply Chain Resilience: Enhanced cooperation aims to strengthen supply chains, particularly in pharmaceuticals and critical industries.

• Geopolitical Considerations: The deal underscores the strategic importance of U.S.-UK relations in the evolving global trade landscape.

• Competition with Other Trade Blocs: The US-UK trade deal could increase competition with other trade blocs, such as the European Union, China, and Japan.

• Strategic Focus: The agreement aims to strengthen bilateral trade, enhance supply chain security, and address concerns over third-country transshipments, particularly from China.

• Digital Services Tax (DST): The UK's £800 million DST, primarily affecting U.S. tech firms, remains a contentious issue. While not addressed in the current deal, it may serve as a bargaining tool in future negotiations.

Key Highlights of the UK-US Trade Deal

• Tariff Reductions: The agreement reduces U.S. tariffs on British car imports from 27.5% to 10% for up to 100,000 vehicles annually. It has a relieving impact on the US car imports from the United Kingdom

• Elimination of Metal Tariffs: U.S. tariffs on UK steel and aluminum imports, previously at 25%, have been eliminated, providing relief to the UK metals industry.

• Agricultural Market Access: The UK has removed its 19% tariff on U.S. ethanol imports, allowing up to 1.4 billion liters tariff-free, and has expanded quotas for U.S. beef exports.

• Supply Chain Security: The UK has agreed to align its steel and pharmaceutical sectors with U.S. security standards, aiming to exclude Chinese involvement and enhance supply chain integrity.

Conclusion and Final Verdict

In conclusion, the US-UK free trade deal holds great promise for promoting economic growth, enhancing trade relations, and shaping the future of global trade in 2025. As negotiations progress and agreements are finalized, it will be important for businesses, policymakers, and stakeholders to stay informed and adapt to the changing trade environment. The world is watching closely to see how this FTA will impact the future of international trade.

The 2025 U.S.-UK FTA represents a pragmatic approach to strengthening economic ties post-Brexit. It addresses immediate concerns in key industries and sets the stage for more comprehensive agreements in the future.

We hope that you liked our market research analysis on UK-US bilateral trade relations and our insightful blog report on the US-UK trade deal. Visit USImportdata and contact us at info@tradeimex.in to acquire the latest US import-export data for the first quarter of 2025 with a customized database report. Also, get the data on the top US exporters & US importers data, exclusively at your fingertips!