US tariffs – US trade agreements

The US has taken significant steps with respect to reciprocal arrangements on easing of trade measures with two important agreements reached in the last week. Separately, a Section 232 investigation has been opened for the aircraft industry. Our latest weekly update on tariffs, global tax and more discusses these key issues.

The Week in Summary 

US/UK Economic Prosperity Deal

This week the US and UK laid out a structured framework to deepen bilateral trade ties, with a particular focus on tariff reductions across key sectors. While not a comprehensive free trade agreement, the Economic Prosperity Deal (EPD) outlines mutual commitments to lower or eliminate duties on selected goods and align rules in areas such as automotive, agriculture, metals and pharmaceuticals.

As part of this deal, the UK will eliminate its 20% tariff on in-quota US beef and introduce a new duty-free quota of 13,000 metric tonnes. In return, the US will reallocate an equivalent amount from its beef tariff quota. Preferential duty-free access will also be granted to 1.4 billion litres of US ethanol. 

The US intends to create tariff free quotas for UK steel, aluminium, and vehicles (up to 100,000 units), contingent on the UK meeting US supply chain security requirements. Pharmaceuticals and pharmaceutical ingredients may also benefit from future preferential treatment, subject to findings of the ongoing US Section 232 investigation. 

In addition, US Commerce Secretary Howard Lutnick advised that engines from Rolls-Royce, a UK manufacturer, and similar plane parts would be able to enter the US market without tariffs as part of this trade deal. Interestingly, no reference to these types of goods was made in the 5-page EPD released by the UK and is it to be seen how and when this proposed tariff free access will be applied in practice. 

Both sides have committed to coordinating tariff reduction “as soon as practicable” and to apply robust rules of origin to prevent circumvention from other nations. 

US/China deal

On May 12, 2025, the United States and China issued a joint statement following economic and trade discussions in Geneva, announcing a 90-day agreement to reduce tariffs and facilitate further negotiations. Under this agreement, the US will lower tariffs on Chinese imports from 145% to 30% (20% “fentanyl” and 10% “reciprocal”), while China will reduce its tariffs on US goods from 125% to 10%.

This temporary arrangement aims to de-escalate recent trade tensions and provide a framework for continued dialogue on broader economic issues. Both nations emphasised the importance of a sustainable, long-term, and mutually beneficial economic and trade relationship.

While the 90-day period offers a reprieve from escalating tariffs, certain sector-specific duties, such as those related to the fentanyl crisis, remain in place. The agreement also includes commitments to address non-tariff barriers and to establish mechanisms for ongoing consultation.

Pharmaceutical sector

This week marked the conclusion of the public comment period for the Section 232 national security investigation into pharmaceutical imports, which closed on May 7. The investigation, initiated on April 1, aims to determine whether reliance on foreign pharmaceutical products-including active pharmaceutical ingredients (APls) and finished drugs-poses a national security risk.

President Trump has announced plans to impose tariffs on pharmaceutical imports within the next two weeks as a part of broader effort to reduce the US's trade deficit in pharmaceuticals and encourage domestic manufacturing.

For Irish and EU pharmaceutical companies, especially those exporting to the US, these developments could lead to increased costs and potential supply chain disruptions. Stakeholders are advised to monitor the situation closely as the US administration finalizes its tariff decisions.

Aviation industry

On 1 May, the US Department of Commerce announced the launch of a new investigation under Section 232 of the Trade Expansion Act, aimed at determining whether imports of commercial aircraft, jet engines, and related parts threaten national security.

This move signals a continued willingness by the US to use national security justifications to assess and potentially restrict trade. While no tariffs or other restrictions have been imposed at this stage, the probe could ultimately lead to the introduction of new trade measures - such as import duties, quotas, or other remedial actions - depending on the findings of the investigation.

The Department is currently seeking public comments on a range of topics, including the state of domestic production capabilities, the availability of essential components, and the extent of reliance on foreign suppliers - particularly in times of conflict or supply chain disruption.

For Irish and EU organisations active in the US aerospace supply chain - whether as parts manufacturers, service providers, or investors - this investigation presents another important development to monitor. It underscores the growing use of national security instruments to shape trade policy and may introduce additional layers of risk or compliance obligations in the months ahead.

We’re here to help you

Keeping up to date with US trade policies, trade agreements and new and existing tariff reviews which may lead to further tariff measures is crucial to assessing the risk to your supply chain and the impact these tariffs may have. Understanding your product portfolio and the impact that tariffs may have on your imports is an important first step. We are here to support your business with this analysis and navigating these choppy waters.