Impact of UK-US deal on UK agriculture

Background

The new US administration has certainly made its mark on global trade since coming into power:

• In March 2025, a 25% tariff on all steel and aluminium imports into the USA came into force
• In late March 2025, a 25% tariff on car and car part imports into the USA was announced
• In April 2025, a raft of blanket tariff measures for different countries was imposed. For the UK, these were set at 10%
• These tariffs were in addition to any existing tariffs on these goods

Amid a rather fluid situation regarding tariff impositions, the UK-US Economic Prosperity Deal (EPD) aims to strengthen economic ties between the two countries by increasing market access and reducing tariffs to benefit many sectors including steel, automotive and agriculture.

Specifically, the UK-US EPD will remove the tariff on UK steel exports to the USA and reduce tariffs on UK car exports to the USA from 27.5% to 10%.

The blanket 10% tariff imposition on all UK imports remains intact.

Beef and ethanol were the key products mentioned with regard to agriculture and are discussed in detail below.

Beef

Opportunities

The UK will be able to export up to 13,000 t of beef to the USA, tariff-free, following changes to an existing tariff rate quota (TRQ).

The USA has a TRQ for beef imports within which there are country-specific quotas for Australia, New Zealand, Argentina and Uruguay. The UK, along with Brazil, has access to the US TRQ under the ‘Other Countries’ allocation, which is 65,005 t.

In practical terms, however, it has been challenging for the UK to make use of this TRQ as Brazil often uses the entire allocation. In 2024, Brazil had made use of the ‘Other Countries’ allocation by 28 March (it opened on 1 January 2024).

This year, the ‘Other Countries’ allocation was spent in just 17 days after opening at the start of the calendar year.

The proximity of Brazil to the USA has also put the UK at a disadvantage in this respect; UK beef exporters would be wary of risking sending shipments of beef across the Atlantic only to find that upon arrival, the quota allocation has been used up and they would face full tariff rates for their beef to cross the US border.

The UK-US EPD removes this risk as the UK would have its own TRQ allocation.

We have previously indicated in our export opportunities analysis how there is good potential for UK beef exports to the USA as it can be marketed as a premium product based on its high welfare and hormone-free credentials, among others.

Figure 1. Beef (fresh, frozen and offal) trade between the UK and USA

Source: HMRC via Trade Data Monitor

Threats

Currently, the US has a 1,000 t quota for exporting beef to the UK, which is subject to a 20% tariff. Under the prosperity deal, the 20% tariff will be removed and the USA will have a preferential beef TRQ of 13,000 t.

US beef imports will have to meet UK food standards, so the Government’s red line on this aspect remains intact.

While the quantity of beef imports from the USA matches that of beef exports from the UK, there are concerns over the value of imported US beef. Imports of high-value, premium cuts, such as strip loins, could have a considerable impact on the UK domestic market.

The British Meat Processors Association (BMPA) estimates that the UK produces around 3,900 t of strip loins, which is just under a third of the beef TRQ for the USA.

The UK is also at risk from premium beef imports from Australia and New Zealand as a result of existing trade deals with Australia and New Zealand.

Ethanol – likely more threats than opportunities

The UK-US EPD will remove the current 19% tariff on ethanol imports and replace this with a duty free TRQ of 1.4bn L. While this sets out to lower costs for manufacturing sectors which use ethanol as a raw material, it could pose a considerable threat to agriculture.

The UK imported an average of 559m L of US ethanol between 2022 and 2024. The USA is the main import origin for ethanol, followed by the Netherlands.

The USA is the world’s largest producer of ethanol, which is primarily produced from maize, which the country has an abundance of.

The ‘corn belt’ states in the Midwest account for the majority of US ethanol production due to high production levels and existing biorefinery infrastructure. As a result, the USA can produce bioethanol at a low cost and export it at a competitive price on the international market.

British ethanol is mainly made from feed wheat, which supports farmers not only locally but across the country. As the two bioethanol plants in the UK are situated in the North, feed wheat naturally travels towards this demand centre.

Bioethanol plays a big part in decarbonising the transport sector by creating an E10 petrol blend to reduce emissions. The process also creates two important by-products of carbon dioxide and high protein animal feed.

With the new tariff changes, there's a risk that more competitively priced US ethanol imports will be preferred, causing pressure on UK ethanol production.

The UK bioethanol plants currently have the capacity to buy around 2m t of wheat each year, so many farmers would lose a reliable market for their feed wheat. This could also lead to higher animal feed prices, as this wouldn't be produced as a by-product.

Other industries and sectors, such as the NHS, also rely on the carbon dioxide produced in ethanol production.

UK bioethanol has already been struggling due to competition from the USA, so this will make things tougher for the sector. With the news of US ethanol tariff changes, both UK plants have stated that UK bioethanol production is at risk.

Potentially further implications for agriculture?

While beef and ethanol are the key points for agriculture in this initial announcement, there is potential for further impacts. A UK Government release on the deal states that the UK and USA ‘plan to work constructively in an effort to enhance agricultural market access’.

We have previously examined the implications of a UK-US trade deal in depth and will continue to monitor and analyse further developments.