UK Trade Strategy & US Trade Deal — June 2025: A Turning Point?

In June 2025, two related stories converged that could reshape the UK’s trajectory in global trade. First, the UK government published a new Trade Strategy aimed at unlocking access to global markets, boosting business, and defending vital industries. Second, in parallel, the UK and US moved forward toward implementing a bilateral trade deal that reduces tariffs on goods like steel, aluminium, cars, and heightens market access for US agricultural exports. Taken together, these represent a stronger and more proactive trade policy for the UK, seeking to navigate a tougher global environment of tariffs, trade uncertainty, and geopolitical risk.

Let’s dive into what was announced, the background that made it necessary, what’s at stake, and what to look for next.

What Was Announced in June 2025

1. UK’s New Trade Strategy

On 25 June 2025, the UK government unveiled a comprehensive Trade Strategy intended to “protect and boost British business”. Key components included:

• Unlocking £5 billion in support for businesses.

  
  

• Expanding the capacity of UK Export Finance (UKEF) to £80 billion.

  
  

• Strengthening trade defence tools to better shield vital industries against global threats.

Accelerating trade deals so that UK firms can benefit “sooner”, with particular emphasis on service sectors and other high-growth areas.

The strategy signals a shift in tone: more urgency, more protection, and more agility. The phrase “get deals done faster” recurs. Also, the UK is showing an increased willingness to use trade defence (tariffs, countervailing duties, etc.) and to pick sectors for strategic advantage.

2. UK-US Trade Deal Developments

Simultaneously, in early June, the UK was working to transform its “tariff pact” with the United States (announced earlier) into an operational deal. Among the announcements:

The removal of tariffs on British steel and aluminium and the reduction of car tariffs. Specifically, US tariffs on UK-made steel and aluminium (previously high under US trade policy) are being phased out or removed. Cars exported from the UK to the US would face lower tariffs.

UK trade minister Jonathan Reynolds talked about eliminating 27.5% tariffs on cars and 25% tariffs on steel under the deal, subject to implementation.

The trade deal went into force on 30 June 2025. It includes removing tariffs on UK steel and aluminium exports and reducing car tariffs.

These changes are coming after months of tension (especially since President Trump’s return to office), during which the US imposed various reciprocal tariffs (on different trading partners), including heavy duties on steel, aluminium, and crops, etc.

Why All This Matters

To understand the significance, we need context. The global trading system is under pressure: tariff wars, supply chain disruptions, geopolitical insecurity, and increasing trade policy volatility. For the UK, which is more outward-looking since Brexit, trade agreements and rules are among central levers for shaping economic growth.

Here are the key implications and why these announcements matter:

Trade Policy & Uncertainty

One major issue over the past year has been unpredictability. US tariffs (steel, aluminium, cars) and threats of more have made it hard for UK exporters to plan. Last-minute changes in trade policy can upend investment, supply chains, costs. By locking in tariff removals or reductions with the US, the UK gains certainty and can better plan exports in affected sectors.

Competitive Advantage & Industry Impact

Steel and aluminium industries are often politically charged: energy intensive, sensitive to carbon costs, and vulnerable to cheap imports. Tariffs and trade barriers heavily affect their competitiveness. For UK manufacturers who export to the US, these tariff reductions could improve margins, make them more competitive globally, and reduce overheads. For companies reliant on imported steel/aluminium for downstream products (auto, construction, appliances), lower input costs matter.

The automotive sector also features heavily: car exports from the UK have historically been a big deal. Reducing tariffs on UK cars entering the US lowers cost burdens and enhances market access. However, catch-ups may be required in compliance, quotas, or standards.

Trade Defence & Strategic Sectors

The Trade Strategy includes stronger trade defence tools. That means the UK is more ready to respond to unfair trade practices: dumping, subsidies, etc. Also, focus sectors (high growth, services, digital) indicate the UK aims to lean into its strengths (finance, creative industries, tech, etc.) rather than trying to replicate mass manufacturing that is capital/energy intensive.

Bilateral vs Multilateral

These deals are bilateral. The US deal is with the UK, and the Trade Strategy talks about speeding up deals. Meanwhile, the multilateral trade system (WTO) is weaker in some respects — appeals body non-functional, delays, etc. The UK also joined the MPIA (Multi-party Interim Appeal Arbitration Arrangement) under the WTO to help preserve dispute resolution in the absence of a fully functioning Appellate Body.

Trade and Economic Security

So, the UK is hedging: doing bilateral where effective, reinforcing multilateral mechanisms where possible, and protecting its interests.

Risks, Challenges & Open Questions

While promising, these changes are not without friction, and there are several things to watch out for.

Implementation & Timing

Announcing a trade deal is one thing; implementing it is another. Tariff reductions depend on rules of origin compliance, quotas (if any), regulatory approvals, and sometimes political negotiations. Even with the UK-US deal in force June 30, the first full month of data reflecting its impact may only emerge in July or August.

Office for National Statistics

Delays or loopholes could limit the benefit. For sectors like cars, reduced tariffs only help if standards, shipping, logistics, and supply chain costs are manageable.

Retaliation & Political Backlash

US trade policy under “reciprocal” tariffs and national security rationales (e.g. Section 232) has been controversial. Other trading partners might respond or feel pressured. Also, political changes (in either country) might shift priorities. UK governments must maintain consistency, and US administrations may revisit or renegotiate.

Trade Defence vs Free Trade Tension

While trade defence protects certain sectors, aggressive defence can look protectionist. There is always a balance: defending against unfair trade must be done in line with WTO rules or else legal challenges may arise. Over emphasising protection might hurt competitiveness in sectors where UK firms want open access.

Global Dynamics & Supply Chain Shocks

Tariffs are only part of the picture. Shipping costs, raw material shortages, energy cost volatility, trade policy in multiple countries, inflation — all these externalities influence whether businesses really benefit. UK exporters also face competition from third markets; reducing US barriers is helpful, but those competitors may have lower costs or better local conditions.

Monitoring & Measuring Impact

Making sure that gains are real means good metrics: export volume and value by sector, changes in producer margins, cost of inputs, consumer prices, trade balance, and how quickly firms adjust. Also considering unintended consequences (for example, domestic industries facing higher competition from cheaper imports not covered by the deal).

What Data & Trends Were Emerging in June

To support understanding, some related trade data from June shows how patterns were shifting:

• The UK’s overseas trade in goods for June 2025 had Switzerland leap to become the UK’s top import partner (from 8th place in May), largely driven by imports of precious metals.

  
  

• The USA remained a major partner, with increases in imports, especially of aircraft.

  
  

• Exports of machinery, transport equipment, and chemicals saw declines in certain subsectors, particularly cars and inorganic chemicals.

These shifts show that trade policy changes (like the US-UK deal) will need time to ripple through the economy. Some sectors are already feeling pressures; others may see relief or opportunity once tariff cuts fully bed in.

Strategic Implications for UK Businesses

For UK firms, especially exporters or those integrating with the US supply chains, this period demands active strategic thinking. Here are some implications:

Revisit export markets & competitiveness

Firms exporting steel, aluminium, automotive parts should model how the tariff reductions change cost structures. Some products may become more competitive in the US—assessing margins, pricing, and logistics gains will be crucial.

Align with standards, compliance & supply chains

Regulatory standards (safety, environmental, rules of origin) are often key sticking points in trade deals. Ensuring compliance will help firms fully benefit from preferential terms.

Trade defence readiness

Firms should keep an eye on possible dumping, subsidy disputes (from abroad), or import surges in sensitive sectors. Being able to engage in trade defence—having legal and technical capacity to support anti-dumping or countervailing cases—may become important.

Diversify partners

While the US-UK deal helps, dependency on one market has risks (tariffs, policy shifts). Exploring multiple export markets, trade agreements, and supply chains will help resilience.

Innovation & high-growth sectors

The UK’s strategy emphasises services, digital, climate/green technologies, critical minerals, etc. Businesses that lean into those may gain more from quicker trade deals and sector-specific support.

Broader Global Impacts & Comparisons

Looking beyond the UK, this trade development is interesting in the wider global trade context.

US Trade Policy Volatility: Under the current US administration, there’s continued use of tariffs, national security claims, and “reciprocal” tariff threats. The UK-US deal signals one way that other countries may seek to negotiate or mitigate exposure rather than simply accept costs.

Multilateral System under Stress: WTO mechanisms, particularly dispute resolution, have been under strain. The UK’s joining of MPIA (Multi-party Interim Appeal Arbitration Arrangement) is one response. Countries are hedging—using multilateral where possible, but also bilateral agreements and regional frameworks.

Trade and Economic Security

Trade Defence & Protectionism: The line between defending domestic industries and protectionism becomes thinner in times of economic stress. Many countries are raising trade defence tools. How these are used will shape trade conflict risk.

Supply Chains & Industrial Policy: Tariffs tend to force companies to re-evaluate their supply chains. The UK’s trade policy is increasingly tied to industrial strategy: what sectors are “vital”, where resilience is needed (e.g. critical minerals, clean energy), and how trade ties into energy/climate policy.

Emerging Markets & Third Parties: As trade becomes more “bilateral plus” rather than purely multilateral, emerging markets may see both opportunities and risks—being left out of preferential deals could put them at disadvantage; but they may also benefit by filling gaps created by shifting supply chains and trade diversion.

What to Watch Next

To see how far this turning point really goes, some indicators and actions will be important.

1. Trade Data for Q3 2025: Exports of steel, aluminium, cars, etc. to the US. Are volumes rising? Are prices improving? Cost savings showing up in margins?

   
   

2. Implementation Details & Rules of Origin: How stringent or flexible are the rules? Are there quotas, caps, or compliance hurdles that limit benefits?

   
   

3. Any Retaliation or Countermeasures: From US or other trading partners, or complaints in WTO. Also, any political resistance (domestic industry, environmental, etc.).

   
   

4. Additional Trade Deals: Whether the UK leverages improved strategy to accelerate deals with other countries (e.g. in Asia, Latin America, Africa), especially for services and high-growth sectors.

   
   

5. Trade Defence Cases: Whether the UK uses its strengthened trade defence tools; whether other countries bring cases under MPIA or WTO in response to moves by the UK or US.

   
   

6. Business Confidence & Investment: Do UK firms respond with increased investment? Do they shift operations, expand exports, or restructure supply chains to capitalise?

   
   

7. Cost of Imports & Impact on Consumers: Tariff changes can lower costs for firms, but will these savings make it through to consumers (cars, manufactured goods, etc.) or be eaten by logistics, energy, or other costs?

June 2025 may well mark a watershed for UK trade policy. The combination of a more assertive Trade Strategy and the operationalisation of a UK-US trade deal suggests that the UK is trying to solidify its footing in a volatile global trade landscape. The danger, as always, is in execution — trade deals only matter if the technical, regulatory, and logistical nuts and bolts are managed well.

For UK businesses, this is a window of opportunity. For policy watchers and economists, it’s a test of whether a middle‐power economy can navigate between protectionism, bilateralism, and the weakening multilateral trade order, while retaining competitiveness and promoting growth.

If you're involved in trade—exporting, manufacturing, supply chains, regulation—this is a moment to lean in: assess the impacts, plan ahead, engage with policy, and make sure you’re not left behind in the shifting tides of global trade.