FAQ: How do the UK and EU tariff deals really compare?

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It’s hard to keep up with what this means for the UK and the EU. So let’s go back to April 2025, when the first ‘Liberation Day’ tariffs hit, to see how we got here.

The UK struck a deal quickly – the UK-US Economic Prosperity Deal was announced around a month after ‘Liberation Day’. The EU deal came three months later. Some called the UK’s deal a ‘Brexit win’ – quicker and with a lower average tariff rate than the EU.

A year on, with new tariffs announced, how true is that really?

What are tariffs?

Tariffs are taxes charged by a government on imported goods, usually as a percentage of the price. They increase the costs of buying goods from abroad – since it’s the business bringing the goods in, and not the exporter, who pays. 

Is the UK subject to Trump’s tariffs?

Yes. When the first US tariffs were announced, the UK was faced with a 10% tariff on most goods. This was better than the higher rate facing the EU, of 20%.

But that wasn’t the case for every UK product. For example, like the rest of the world, the UK still faced a 27.5% tariff on cars.

The UK signed the UK-US Economic Prosperity Deal in May 2025, the first country to reach an agreement with the US. Under that deal, UK negotiators secured some wins: reducing the tariff on cars back down to 10% for the first 100,000 cars shipped every year and removal of tariffs on aircraft parts. In return, the UK opened up access for US beef and ethanol. 

And what is the EU’s agreement with the US?

The EU’s ‘Turnberry Deal’, signed in August 2025, cut its tariff from 20% to 15% in exchange for scrapping tariffs on US industrial goods and buying more US energy products. 

That 15% rate was higher than the UK’s 10%. 

But here’s the key part: the EU also got the US to agree that 15% would be an ‘all-inclusive ceiling’ – in other words, a maximum – for most products. 

How does the EU’s ‘all-inclusive ceiling’ work? 

In practice, imported goods can face several tariffs at once that ‘stack’ on top of each other. 

For example, because neither the EU or UK has a free trade deal with the US, the US can charge us both standard tariffs under World Trade Organisation (WTO) rules.

These standard tariffs are called “Most Favoured Nation” (MFN) tariffs. Confusingly, this doesn’t mean favourable treatment. It just means that a country cannot be treated any worse than another when it comes to the standard tariff.

The EU’s deal took into account this stacking effect. For most EU goods, the US agreed that the combined value of the tariffs would be 15% in total. If a product’s MFN tariff was less than 15%, the US would “top up” the tariff to reach 15% (for example, 5% MFN tariff would end up facing 15% in total, not 20%).  If the MFN tariff was already above 15%, the US agreed to apply nothing else (so 17% MFN tariff would not increase further).

What does that mean for the UK?

The UK’s deal has no cap clause. Its 10% tariff is added on top of the MFN rate.

That means the UK’s headline rate looks better, but the real picture depends on the product. The balance crosses over at the 5% point: for goods with an MFN tariff below 5%, the UK’s total stays lower than the EU’s; but for anything with an MFN tariff above 5%, the EU’s 15% ceiling works out lower than the UK’s 10%-plus-MFN total.

Trump’s forced labour tariffs add a final twist…

How are UK and EU goods treated under Trump’s July tariff announcements?

In July, Trump accused 60 countries, including the UK and EU member states, of failing to ban forced labour. It charged the UK and the EU a 10% tariff (the lower of two rates). 

But for the EU, the 10% rate may have now replaced the 15% as a new maximum. The US’ own memorandum says, ‘where such a product’s MFN tariff is less than 10 percent… the sum of the MFN tariff and the section 301 tariff shall be 10 percent’. 

The European Commission, perhaps to be safe, still lists the overall ceiling as 15% but if 10% is in fact the new ceiling then, for any goods with no MFN tariff (0%), the UK and EU are charged the same 10% rate. For any goods with MFN rates above 10%, the UK’s rate (MFN plus 10%) would be higher than the EU’s.

So who has the better deal now?  

The legal picture is unclear, and a web of sectoral exemptions means it varies by product. But a year on, the EU looks to have the edge

That’s no surprise economically or politically. The US exports around four times as much in goods to the EU than the UK, giving Brussels more leverage. Since Brexit, the UK has had to chase special treatment from individual trading partners. Meanwhile, the EU wields the comparative advantage of being part of the world’s largest integrated market and trading bloc, one the UK must rejoin.