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U.S.-UK Trade Relations: Background and Selected Issues

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U.S.-UK Trade Relations: Background and SelectSelected Issues
Updated July 25, 202524, 2026 (IF11123)

The United States and the United Kingdom (UK) are close trade and investment partners. In May 2025, President Trump and then-UK Prime Minister Keir Starmer announced the General Terms of the U.S.-UK Economic Prosperity Deal (EPD) to address certain trade issues, including tariff actions taken by the Trump Administration since January 2025. The 119th Congress may consider whether to modify tariff authorities delegated to the President; seek to shape implementation of the EPD general terms; and deliberate on U.S. trade policy toward the UK and how it could affect bilateral relations more generally.

Background

In January 2021, the UK completed its withdrawal from the European Union (EU), known as Brexit, leaving the EU single market and customs union and regaining greater control of its trade policy, including to negotiate its own trade deals with other countries. The UK government has developed some trade deals to replace those negotiated by the EU—deals to which the UK had been a party as an EU member. The UK has also been working to develop trade deals with new partners, including the United States.

Over the past decade, U.S.-UK trade and foreign direct investment (FDI) have grown generally (Figure 1). In 2025, the UK was the United States' tenth-largest partner for total goods trade (exports plus imports); largest partner for total services trade; and top partner for two-way FDI (outbound plus inbound FDI, historical-cost basis).

Figure 1. U.S.-UK Trade and Investment

Source: CRS, with U.S. Bureau of Economic Analysis (BEA) data.

Top U.S. goods exports to the UK included gold; civilian aircraft, engines, and parts; silver; petroleum oil (crude); and certain medications. Top U.S. goods imports from the UK included motor vehicles; turbojets/turbines; certain medications; and blood and related products. Financial and business services were top services traded bilaterally. U.S. FDI in the UK was concentrated in nonbank holding companies, finance, and insurance; manufacturing was the leading destination of UK FDI in the United States.

Selected Bilateral Trade Issues

Tariffs

Since January 2025, the Trump Administration has imposed tariffs that affect the UK, including a UK-specific 10% tariff that it applied invoking the International Emergency Economic Powers Act (IEEPA). In February 2026, the Supreme Court held that IEEPA does not authorize the President to impose tariffs. President Trump lifted the IEEPA tariffs and applied a temporary 10% across-the-board tariff under Section 122 of the Trade Act of 1974 that expired on July 24, 2026.

On July 23, 2026, the President announced Section 301 tariffs relating to the enforcement by various trading partners, including the UK, of import bans of goods made with forced labor. The UK faces a 10% tariff based on the assessment that the UK has "imposed a partial regime" to prevent import of products made with forced labor. Certain products of the UK are excluded from the tariffs to encourage the UK to effectively enforce a prohibition. Previously, in June 2026, the U.S. Trade Representative (USTR) announced findings in Section 301 investigations on this matter, finding that the UK has a "patchwork of laws" that does not impose such a prohibition, but "appear[s] to have the effect of partially excluding forced labor imports." USTR also pointed to the UK's "interest in high-standard commitments related to addressing forced labor in supply chains" under the EPD general terms.

The Administration has also imposed expanded tariffs on U.S. imports of steel and aluminum, and new tariffs on U.S. imports of automotives, under Section 232 of the Trade Expansion Act of 1962, as amended. The UK faces other potential Section 232 tariffs.

According to an external tariff tracker, the trade-weighted average U.S. tariff rate on the UK was 0.8% pre-January 2025, and 7.2% as of February 2026. UK officials previously called the U.S. tariffs "regrettable." The UK has not announced any retaliatory measures, though it held a public consultation on potential measures.

U.S.-UK Tariff and Trade Deal

The post-Brexit period has seen U.S.-UK efforts to expand trade ties, including negotiations on a bilateral FTA during the first Trump Administration that was not concluded.

In May 2025, President Trump and then-Prime Minister Starmer concluded the EPD general terms to reduce and eliminate certain tariffs and cooperate on issues such as agriculture, digital trade, and economic security. Congress did not have a formal role in the general terms' approval. The United States and the UK planned to formalize the proposals, with the understanding that the EPD could be expanded later. Proposals include the following:

  • U.S. Tariff on UK. No change was made to the additional 10% U.S. tariff on UK products (previously applied invoking IEEPA, then Section 122, and subsequently Section 301).
    • Automotives and Aircraft. After a "reasonable period of negotiation," each party aimed to reduce     (IF11123)

    The United States and the United Kingdom (UK) are among the world's largest economies and are close trade and investment partners (Figure 1). During the first Trump Administration, following the UK's withdrawal from the European Union (EU) ("Brexit," see text box), the United States and the UK negotiated but did not conclude a comprehensive free trade agreement (FTA). During the second Trump Administration, after the imposition of U.S. tariffs and U.S.-UK trade talks, the two governments announced in May 2025 a framework deal to address tariffs and other issues. Members of the 119th Congress may oversee implementation of the framework deal; consider whether or not to support proposals to modify tariff authorities delegated to the executive branch that could affect U.S.-UK trade; consider whether or not to support proposals to pursue bilateral FTA talks; and deliberate on U.S. trade policy toward the UK more broadly.

    Figure 1. U.S.-UK Trade and Investment

    Source: CRS, with U.S. Bureau of Economic Analysis (BEA) data.

    UK Economic Background and U.S.-UK Trade Ties

    In 2024, the UK was the world's sixth-largest economy, based on gross domestic product (GDP) at current prices. UK real GDP grew 1.1% in 2024. Services comprised 72.8% of the UK economy. The UK economy has faced sluggish growth in recent years following Brexit, although it has been difficult to disentangle Brexit's economic effects from other factors, such as COVID-19. UK Prime Minister (PM) Keir Starmer has sought to grow the UK economy through measures such as infrastructure investments. Some observers question the extent to which the U.S. tariff actions announced since January 2025 might affect UK economic growth. In April 2025, the International Monetary Fund revised its projection for UK economic growth in real GDP for 2025 from 1.6% to 1.1%.

    In 2024, the UK was the United States' ninth-largest goods trade partner and largest services trade and foreign direct investment (FDI) partner by country. Top U.S. bilateral goods exports included gold; civilian aircraft, engines, and parts; petroleum oil (crude); and medications (excluding vaccines). Top U.S. bilateral goods imports included motor vehicles; turbojets/turbines; blood and related products; and medications (excluding vaccines). Financial and business services were top services traded bilaterally. U.S. FDI in the UK was $1.1 trillion, concentrated in non-bank holding companies, finance, and insurance; UK FDI in the United States was $743 billion, concentrated in manufacturing (historical-cost basis, stock). In 2024, the U.S. share of UK exports and imports was 23% of 13%, respectively; the EU accounted for 41% of UK exports and 51% of UK imports.

    UK Post-Brexit Developments

    In January 2021, the UK completed its withdrawal from the EU, leaving the EU single market and customs union and regaining control of its trade policy, including to negotiate its own trade deals with other countries. The UK-EU Trade and Cooperation Agreement (TCA), signed on December 30, 2020, underpins UK-EU post-Brexit trade ties. The TCA provides for tariff-free treatment for qualifying UK-EU goods trade, but did not replicate EU single market access (free movement within the EU of goods, services, capital, and people). It has limited provisions in some areas (e.g., financial services regulation). It also added customs procedures and health and safety checks on traded goods.

    During Brexit negotiations and since, the parties have grappled with how to handle the treatment of goods flowing between Northern Ireland (part of the UK) and the Republic of Ireland (EU member), a complex matter due to Northern Ireland's political history and peace process. The parties developed the Ireland/Northern Ireland Protocol as a part of the UK-EU Withdrawal Agreement to avoid a hard border between Northern Ireland and Ireland (e.g., no physical customs infrastructure), while also respecting the rules of the EU single market. The Protocol kept Northern Ireland, unlike the rest of the UK, aligned with some EU trade rules. Implementation of the Protocol disrupted some trade between Northern Ireland and the rest of the UK, and also raised political tensions within Northern Ireland and between the UK and the EU. In 2023, the UK and the EU concluded the Windsor Framework to amend the Protocol, easing checks on some goods entering Northern Ireland from the rest of the UK, while ensuring that goods heading to Ireland comply with EU rules. As part of additional post-Brexit cooperation, the UK and the EU have committed to develop a sanitary and phytosanitary (SPS) agreement to ease checks on trade in plant and animal products.

    The UK government has developed some trade deals to replace those negotiated by the EU—deals to which the UK had been a party as an EU member. It also is working to develop trade deals with new partners. In May 2025, the UK reached a trade deal with India and a framework deal with the United States (see below). In June 2025, the UK issued industrial and trade strategies to support UK businesses, promote services and exports, and formulate measures against unfair trade practices.

    U.S.-UK Tariff Issues and Bilateral Deal

    Since January 2025, the Trump Administration has imposed tariff actions that affect the UK, including a 10% tariff under the International Emergency Economic Powers Act (IEEPA) and tariffs of 25% on steel, aluminum, and automotives under Section 232 of the Trade Expansion Act of 1962, as amended ("Sec. 232"). UK officials have called the U.S. tariffs "regrettable." The UK has not announced any retaliatory measures to date, though in April 2025, it held a public consultation on potential measures. In May 2025, President Trump and PM Starmer concluded General Terms of the U.S.-UK Economic Prosperity Deal (EPD) to reduce and eliminate certain tariffs, and cooperate on other issues (e.g., agriculture, digital trade, economic security). The General Terms did not change the 10% IEEPA tariff. In June, President Trump issued Executive Order 14309, announcing EPD-related actions to reduce tariffs on UK automotive and aerospace imminently, and on steel and aluminum products at a future date. The UK government also committed to implement tariff proposals to improve access for imports of U.S. beef and ethanol. (Table 1.)

    Table 1. U.S.-UK Economic Prosperity Deal (EPD)

    Select Provisions of EPD General Terms

    Select U.S. and UK Actions
    • After a "reasonable period of negotiation," each side "intends to reduce" tariffs on the other "in sectors of importance."

    Executive Order (E.O.) tariffs on the other "in sectors of importance." Executive Order (EO) 14309 ( (June 16, 20252025) provided for a quota under which the first 100,000 UK vehicles imported into the United States will face a 10% tariff, with additional vehicles each year facing the 25% tariffs under Section 232 of the Trade Expansion Act of 1962, as amended ("Sec. 232"). (A June 3 proclamation increased the Sec. 232 tariffs to 50%, while excluding the UK from the increase. It stated that the UK could face the increase starting on or after July 9, depending on EPD compliance; to date, the tariff rate for the UK is 25%.) The E.O. also provided for elimination of 25% tariffs under Section 232. The EO also eliminated U.S. tariffs on some UK aerospace products. These E.O.EO actions were effective June 2025. Beef and Ethanol. The UK proposed to eliminate a 20% tariff on U.S. beef for 1,000 metric tons (MT) of its existing WTO quota and to actions were implemented by 90 Fed. Reg. 123 ( June 30, 2025).

    • UK to eliminate a 20% tariff on U.S. beef and create a "preferential duty-free quota" for 13,000 metric tons of U.S. beef, with the United States to take equivalent action on UK beef. UK also to create duty-free quota for 1.4 billion liters of U.S. ethanol.

    Announcement by UK government (originally June 16, 2025) that it will execute its legislative process to take these actions. A UK press release announced the entry-into-force of the beef and ethanol quotas on June 30, 2025.
    To date, the United States does not appear to have taken action regarding the beef quota.

    • U.S. and UK to negotiate an alternative arrangement to the Sec.MT of U.S. beef. The United States proposed to reallocate 13,000 MT of its existing "Other Countries" beef quota to the UK to receive the most-favored-nation (MFN) duty rate—the rate under the World Trade Organization (WTO) nondiscrimination principle. The UK also proposed to create a duty-free quota for 1.4 billion liters of U.S. ethanol. The UK and U.S. governments acted on these proposals in June 2025 and January 2026, respectively. Steel and Aluminum. The parties proposed to negotiate an alternative arrangement to Section 232 steel and aluminum tariffs, provided the UK meets supply chain security requirements.

    E.O.EO 14309 provided for a future tariff-rate quota (TRQ) (no date set) to allow a certain amount of U.S. steel and aluminum imports from the UK to enter at most-favored-nationMFN rates, subject to conditions.

    • U.S. and UK In 2022, the Biden Administration and the UK negotiated a TRQ arrangement in place of the steel and aluminum tariffs; in his second term, President Trump terminated such alternative arrangements, including with the UK. In June 2025, the President increased the Section 232 steel and aluminum tariffs to 50%, while excluding the UK from the increase, which continued to face a 25% tariff. Starting in April 2026, in order to qualify for a lower tariff rate, UK steel and aluminum products must contain at least 95% UK-origin steel and aluminum. A special exception exists for Netherlands-supplied materials for Tata Steel UK. Pharmaceuticals. The U.S. and UK governments proposed to negotiate on preferential treatment for pharmaceuticals and seek preferential outcomes on goods that may facefacing potential future U.S. tariffs. On April 2, 2026, the Administration announced a U.S.-UK pharmaceutical pricing arrangement, under which the UK committed to expand spending on new medicines and the United States committed not to apply additional pharmaceutical tariffs on the UK under Section 232 or Section 301. That same day, the President announced new Section 232 pharmaceutical tariffs of up to 100% to be phased in starting in July 2026, while maintaining the tariff rate for UK pharmaceutical products at 10%. Some UK pharmaceutical companies with pricing deals with the Administration are to be exempt from the tariffs.

      In July 2026, a UK Parliament committee published its biannual "stocktake" of the UK-U.S. economic relationship, conducted "amid concerns that continued turbulence is frustrating ambitions for deeper trade." It called for, among other things, the UK to seek a lower baseline tariff and seek cooperation on shared interests (e.g., economic security). To what extent new prime minister Andy Burnham maintains or modifies UK trade policy remains to be seen.

      UK Digital Services Tax (DST)

      In February 2025, President Trump directed USTR to determine whether to renew an investigation under Section 301 of the UK's and some other countries' DSTs. In June 2026, the President pledged to impose a 100% tariff on any European country that implements a DST; the pledge did not specifically call out the UK. The UK has continued to maintain its DST, while stating a preference for reforming the international tax framework as a "long-term solution." In his second term, President Trump withdrew U.S. support for a 2021 global tax framework, which has since stalled in implementation among participants. In January 2026, the Administration negotiated an exception to one of its pillars.

      Regulatory, Technology, and Supply Chain Issues

      USTR has raised ongoing concerns about UK regulatory approaches, including restrictions on genetically modified food products. USTR has also raised concerns that the UK may continue to retain certain EU regulatory approaches, such as for agricultural chemicals and pesticides, that U.S. businesses perceive as restrictive. Some U.S. and UK industry groups seek to enhance U.S.-UK market access and regulatory alignment. Some in UK civil society voice concern that such action could weaken UK food safety.

      In September 2025, the U.S. and UK governments concluded a Technology Prosperity Deal to cooperate on advanced technologies, including artificial intelligence (AI), civil nuclear technologies, and quantum computing. Per press reports, in December 2025 the U.S. government halted implementation of the deal expressing some apparent frustration with the pace of broader U.S.-UK trade talks, which reportedly were complicated by differences such as in positions on food regulations. The parties reportedly resumed some tech collaboration in February 2026. The U.S. and UK governments are also cooperating on other issues, including critical minerals supply chains. Other       future U.S. tariffs.

    Sec. 232 investigations are active, such as on semiconductors, pharmaceuticals, and aircraft.

    Source: CRS, using the EPD and other U.S. and UK official sources.

    Other Bilateral Trade Issues

    In 2018, the first Trump Administration notified Congress under the now-expired Trade Promotion Authority (TPA) of its intent to negotiate a comprehensive FTA with the UK post-Brexit. It conducted five rounds of negotiations in 2020. Some U.S. and UK industry groups supported an FTA as a vehicle to enhance U.S.-UK market access and regulatory alignment. Some in UK civil society opposed a potential FTA, arguing that it would weaken UK food safety and other regulations. Among other contentious issues were e-commerce, financial services, and pharmaceuticals. Neither the Biden Administration nor the second Trump Administration have revived FTA talks.

    During the Biden Administration, the U.S. and UK governments negotiated deals on targeted issues such as the Sec. 232 steel and aluminum tariffs, the "Boeing-Airbus" subsidies dispute in the World Trade Organization (WTO), and the UK digital services tax (DST) (see below). The Biden Administration also engaged with the UK on supply chains and digital technology, and launched negotiations on a critical minerals agreement (CMA) that was not finalized.

    Remaining bilateral trade issues include UK restrictions on genetically modified food products, which the U.S. Trade Representative (USTR) raised in a 2025 report identifying foreign trade barriers to U.S. exports. USTR also noted concerns raised by U.S. exporters that the UK may continue to retain EU regulatory approaches, which they perceive as restrictive, to agricultural chemicals and pesticides.

    Another area of contention is digital trade. In February 2025, President Trump directed USTR to determine whether to renew an investigation under Section 301 of the Trade Act of 1974 of the UK and some other countries' DSTs, noting U.S. tariffs could be used to respond to these taxes. USTR investigated UK's DST in the first Trump Administration and determined that it discriminated against U.S. firms; it imposed and then immediately suspended tariffs to allow time for then-ongoing negotiations on a new global tax framework. Implementation has stalled of the framework, which was developed in 2021, and President Trump withdrew U.S. support in his second term.

    Issues Facing the 119th Congress

    Congress is debating the delegation of tariff authorities to the executive branch, which could affect U.S.-UK trade. Some Members seek to limit the President's authority to impose tariffs (e.g., H.R. 407, H.R. 1903, S. 1272/H.R. 2665); others favor expanding tariffs (e.g., H.R. 505, H.R. 735). Members also may debate the EPD's scope. Some stakeholders have applauded the EPD for promoting fair trade and expanding U.S. access to the UK market; others have criticized the persistence of the 10% IEEPA tariff, Sec. 232 steel and aluminum tariffs, and UK DST.

    Among other issues, some Members have called for providing TPA-like authority to the President to negotiate a comprehensive FTA . Others favor expanding this authority or mandating certain tariff actions by the President.

    Members could also assess the EPD's scope and durability, as well as deliberate on whether Congress should have a formal role in consultation or approval of a final EPD—or such trade deals more broadly. Congress could also debate codifying the EPD, considering any trade-offs between greater congressional control and future U.S.-UK negotiating flexibility.

    Amid ongoing debate about Congress's role in executive agreements, some Members have introduced bills to authorize the President to negotiate a comprehensive FTA specifically with the UK (e.g., H.R. 1743, S. 776). Some experts are optimistic that a U.S.-UK FTA could be concluded with relative ease, given U.S.-UK shared interests. Others hold that talks can be protracted even among like-minded partners due to domestic sensitivities. UK regulatory alignment with the EU (e.g., on SPS, agriculture) could add other complexities to potential U.S.-UK FTA talks, given some U.S.-EU regulatory differences.

    /S. 776).