The 10% baseline tariff on UK goods remains untouched, with only narrow exemptions carved out for cars, aluminum, steel, and select agricultural items. For private equity and global M&A professionals, the headlines say "deal," but the details say "status quo."

Here's what changed—and what didn’t:

On paper, UK car exports to the US now face a reduced 10% tariff (from 27.5%)—but only for the first 100,000 vehicles annually. UK auto exports to the US stood at ~92,000 last year, so the quota simply locks in the status quo. Similarly, steel and aluminum tariffs were eased, but remain subject to opaque quota systems with unclear supply chain requirements. Pharmaceutical and digital trade issues—arguably more strategically important—were punted for future discussion.

In return, the UK committed to opening up an estimated £5–6 billion in market access for US agricultural goods, ethanol, and machinery. These are politically symbolic exports, but as critics note, many of the purchases may have occurred regardless. The UK’s digital services tax, a major US grievance, is still intact.

The Trade Balance Reality

Despite the diplomatic fanfare, the fundamentals haven’t shifted. The US maintains a positive trade balance with the UK—£77.9B in 2024, up from £41.4B in 2015 (+7.3% CAGR), according to the UK Department of Business & Trade. Exports from the UK have grown steadily to nearly £200B, while imports are also rising, but at a slower pace. This widening surplus may explain the tepid US appetite for deeper tariff cuts.

Intra-industry trade dominates

Interestingly, the goods and services exchanged across the Atlantic reflect high levels of intra-industry trade—a hallmark of advanced economies. For instance, both countries export mechanical power generators, aircraft, and medical/pharma products to each other in nearly identical volumes. In services, “Other Business Services” and “Financial” dominate on both ends, indicating mature, services-led trade rather than low-cost arbitrage.

Top goods exports from the UK to the US in 2024 included cars (£9B), pharma (£7B), and mechanical equipment (£5B). From the US to the UK: crude oil (£9B), generators (£6B), and refined oil and aircraft. This mirroring underscores that the opportunity is not about cheap goods—but about integration and shared industrial ecosystems.

The Bigger Picture

The real challenge lies in what this deal doesn’t address: comprehensive digital trade frameworks, healthcare access, or investment protection. Both sides have left the door open for follow-up rounds, but neither appears keen to take politically difficult steps. In a post-Brexit world where the UK needs new global trade anchors, and the US is more inward-looking on tariffs, this deal feels like the floor, not the ceiling.

Bottom line: For GPs and corporate strategists watching transatlantic dynamics, the signal is clear: modest liberalization, no collapse of tariff regimes, and continued reliance on sector-specific carve-outs. Intra-industry trade will endure, but the bigger prize—regulatory harmonization and deeper capital market integration—remains out of reach for now.

Sources & References

BBC. (2025). What is in the UK-US tariff deal? https://www.bbc.com/news/articles/c15ng4g5g0eo 

CNN. (2025). Trump’s first trade ‘deal’ doesn’t bode well for the rest of the world. https://edition.cnn.com/2025/05/09/business/trumps-uk-trade-deal-nightcap

Department for Business & Trade. (2025). Trade and Investment Factsheet. https://assets.publishing.service.gov.uk/media/681343167e56aaab3b5253e5/united-states-trade-and-investment-factsheet-2025-05-02.pdf 

The New York Times. (2025). Trump Administration Updates: U.S. and Britain Hail Benefits of Trade Agreement. https://www.nytimes.com/live/2025/05/08/us/trump-uk-trade-news