Against a backdrop of increased geopolitical instability, we look at what recent UK trade deals with the US and India mean for business and what to watch out for in the next 12-18 months. We have also updated our interactive maps of the UK's trade agreements.
The UK-US trade deal
Faced with threats of very significant increases in tariffs from the US administration, the UK was the first of a number of countries to secure a trade deal reducing some of those tariffs to a lower level (subsequently, the EU and Japan negotiated somewhat similar deals). However, the resulting 5 page trade agreement is very narrow in its coverage - especially compared with the 2500 page UK-EU Trade and Cooperation Agreement (TCA) and the vast majority of the UK's other bilateral trade agreements (see our updated interactive maps).
From a UK perspective, the deal is a success in terms of damage limitation for the automotive and aerospace sectors (where the relevant provisions are already in force). However, it is not likely to result in a significant increase in UK exports to the US (save perhaps for UK beef, where the US has agreed to allocate 13,000 metric tonnes of its "other countries" tariff rate quota to the UK). Meanwhile, for US exporters of bioethanol and beef, the deal may open up some additional opportunities in the UK.
The UK-US trade deal: key points
For UK businesses in the automotive sector, a key "win" was a commitment to introduce a quota on UK-manufactured cars reducing tariffs from 27.5% to 10% on the first 100,000 vehicles imported into the US. The US also agreed not to impose a tariff of 10% on goods including engines and aircraft parts (although this is only referred to in the press release, not the text of the deal and is documented in a US Executive Order). Meanwhile, agreement has yet to be reached on the details of a proposed exemption for the UK from US steel and aluminium tariffs of 25% (albeit that this is lower than the 50% tariff being applied to other countries' production).
On the US side, key "wins" included UK agreement to create a tariff free quota for up to 1.4 billion litres of US bio-ethanol (a move which has been blamed for the closure of one of the UK's two domestic bioethanol plants) and to allow an additional 13,000 metric tonnes of US beef to be imported tariff-free. The deal also contained commitments to hold further discussions on pharmaceuticals, digital trade and national security scrutiny of investors. More generally, the UK has not raised its tariffs on US goods in response to the increased tariffs on UK exports to the US; these remain as set out in the UK's Global Tariff, where US exporters saw some significant reductions in 2021, following Brexit.
What's the impact on business?
Most economists agree that higher tariffs are likely to reduce trade – so from that perspective, any agreement that avoids the imposition of such tariffs is to be welcomed. However, most UK products are not covered by the deal and will therefore face tariffs of at least 10%. In most cases, this is a substantially higher tariff than they faced previously (although not as high as those threatened or imposed on some other countries). This may depress demand for some UK exports, particularly if US buyers are able to find cheaper domestic alternatives.
But the impact on business also depends on who is obliged to pay the tariffs. The usual default position is that the importer pays, although it is possible to agree that the exporter will bear the cost. UK exporters may find that US buyers increasingly expect their suppliers to bear at least some of the cost of increased tariffs. For products benefitting from the UK-US trade deal, they are also likely to demand proof of origin documentation in order to satisfy US customs that the shipment should benefit from lower tariffs specified in the UK-US deal.
The UK-India trade deal
The UK-India trade agreement is far longer and more comprehensive than the UK-US deal, with thirty chapters covering matters from goods and services through to intellectual property rights, government procurement and subsidies. As such, it has more in common with the majority of the UK's other trade agreements – and is likely to have a more significant positive impact in the long term.
What difference will it make to UK businesses?
Historically, India has adopted a highly protectionist approach to trade, imposing very high tariffs on certain products (e.g. a 150% tariff on whisky). It also has a low ranking in the OECD Services Trade Restrictiveness Index, which seeks to measure barriers to trade in services. The UK-India deal is expected to reduce India's average tariff on UK products from 15% to 3% (with whisky tariffs being reduced to 40% over 10 years). The agreement also covers services, although as is often the case with trade agreements (including many of the UK's existing deals), the main benefit is to lock in existing levels of openness, where these go beyond India's quite limited WTO commitments. This is helpful in offering a measure of protection against India introducing additional protectionist measures (which it would otherwise be free to do) – but for the most part, it does not force India to remove existing barriers to trade in services. That said, there are some areas where the deal does provide for greater openness to UK businesses (including those providing services), such as government procurement.
Business mobility: a win for India?
A key benefit from India's perspective is the chapter on business mobility. This refers to the ability of individuals with certain qualifications or experience to travel to the UK or India (as the case may be) and stay in the country for a finite, temporary period to carry out work, such as provision of professional advice or installation of computer software. As with services, the deal largely locks in existing levels of access – but given the political sensitivity of immigration as an issue in the UK, India is likely to count this as an important "win". That said, the agreement does provide some extension of access for certain individual contractual service suppliers and independent (self-employed) professionals. UK employers looking to address skills shortages may be able to benefit from this, although typically, Indian individuals making use of these provisions will not be permitted to stay in the UK for more than a year – so this is only likely to offer a short term solution to recruitment problems.
What's the timing?
Unlike the UK-US deal, where key provisions are already in force, the UK-India agreement will not take effect until 60 days after both countries have ratified it – which in both cases involves Parliamentary scrutiny of the deal. This is likely to take some time and in practice, it is unlikely that businesses will be able to benefit from the deal until 2026 (and even then, some aspects may face further delay due to the need for national implementing legislation to be put in place).
What to watch out for
As highlighted by our interactive maps, the UK already has an extensive network of over 60 trade agreements. However, many of these deals largely replicate the provisions of the EU agreements that they were intended to replace. Only a few – such as the recent deals with Australia, New Zealand and India – can be described as genuinely embodying the UK's post-Brexit approach to trade, now that it has regained full control over this policy area. The UK has also joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership – but again, this largely involved signing up to an existing framework which the UK was not involved in shaping at the outset.
Possible new deals
According to the UK's trade strategy (2025), negotiations are ongoing for new or revised trade agreements with the Gulf Cooperation Council (representing Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates), South Korea, Switzerland and Turkey. Tariff reviews are also underway with South Africa, Egypt, Morocco and Tunisia. Meanwhile, as noted above, the existing UK-US agreement envisages discussions in a number of areas, including pharmaceuticals and digital trade. The UK is also looking at a number of digital trade agreements and considering whether to join the Regional Convention on Pan-Euro-Mediterranean preferential rules of origin (PEM), which would ease "red tape" requirements for goods containing inputs from member countries.
On the "minus" side, negotiations for a revised deal with Israel have been suspended in protest at the Israeli Government's actions in Gaza and talks with Canada (over a revised post-Brexit deal) were suspended in 2024 owing to disagreements on agricultural market access.
The EU-UK "reset"
In economic terms, the biggest impact for the UK would be from a closer trading relationship with the EU. As we reported in May 2025, the UK and the EU have reached an agreement on closer cooperation in a number of areas – but the detail still needs to be worked out. As with the UK-India trade deal, it may therefore be some time before business can benefit from these new arrangements.
Bilateral Investment Treaties
Bilateral Investment Treaties (or BITs) give investors from the UK protection where they make an investment in the "host state" (i.e. the other party to the BIT) – and vice versa where the other party's investors make investments in the UK. In particular, they allow the investor to take action in their own right to protect their investment or obtain compensation (as opposed to having to ask their own government to raise the matter on a state-to-state basis). For more detail, see BITs and the post-Brexit investment landscape. As highlighted by our interactive maps, the UK has an extensive network of BITs – but since we last updated it, the number of BITs has shrunk slightly, driven in part by a concern on the part of some states that the rights given to private investors go too far. This trend may result in further shrinkage of the UK's BIT network.
The Trump effect
Last but by no means least, the current US administration looks set to continue using the threat of tariffs to push for changes in other policy areas which it perceives as adverse to US interests, such as the approach taken by other countries to:
- foreign investment (where the US has raised national security
concerns about levels of Chinese investment in certain sectors,
such as steel in the UK); and
- tax (where the US has been pushing for removal of digital services taxes introduced by the UK and a number of other countries).
In particular, the US has launched a series of trade investigations into products including pharmaceuticals, copper, semiconductors and critical minerals where it believes that other countries' practices harm the US economy and its national security; the resulting reports could be the trigger for further tariff increases in relevant sectors.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
