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President Trump has announced two new trade deals negotiated by the United States: the U.S.-UK Economic Prosperity Deal (“EPD”), announced on May 8, and an executive order, Modifying Reciprocal Tariff Rates to Reflect Discussions with the People’s Republic of China, issued on May 12 (the “PRC Reciprocal Tariff EO”).
Link to U.S.-UK Economic Prosperity Deal U.S.-UK Economic Prosperity Deal
On May 8, the White House issued a set of non-binding General Terms for the EPD, which the United States and United Kingdom are now beginning to negotiate more fully in order to “develop and formalize the proposals” into a legally binding trade agreement. The General Terms indicate that the EPD will cover the following topics:
- Addressing Tariffs. The countries have agreed to negotiate to reduce certain tariff rates on originating U.S. and UK goods in “sectors of importance” as soon as practicable, to reduce tariffs (and/or introduce tariff rate quotas) on certain key items, including beef and ethanol, as well as certain goods subject to existing or planned tariffs under Section 232 of the Trade Act of 1962 (“Section 232”), such as steel and aluminum, automotives, and pharmaceuticals. The United States also announced its intention to “provide certain key UK imports with modified reciprocal tariff treatment.”
- Addressing Non-Tariff Barriers. The countries agreed to “work constructively in an effort to enhance agricultural market access,” and strengthen bilateral agricultural trade. To this end, the countries agreed to increase cooperation and discussions regarding regulations and standards applicable to imports and exports, such as sanitary and phytosanitary standards.
- Increasing Digital Trade. The countries agreed upon an intent to negotiate new digital trade provisions that will cover services, including in particular financial services, as well as paperless trade, pre-arrival processing, and digitalized trading procedures.
- Strengthening Alignment and Collaboration on Economic Security. The countries cited an intention to “strengthen cooperation on economic security” including in particular through coordination to address “non-market policies of third countries.” They agreed to cooperate with respect to investment security measures, export controls, and information and communications technology (ICT) vendor security, and reaffirmed certain government procurement commitments.
- Commercial Considerations and Opportunities. The countries committed to increasing and facilitating “economic integration in critical industries and defense preparedness,” including through identification of “mutually beneficial goods, services, investment opportunities and commercial transactions.”
- Other Matters. Lastly, the countries agreed to discuss IP protections and enforcement, labor practices, and environmental policies.
Although the term sheet was effective as of May 8, no specific timeline was provided for negotiation and entry into the EPD itself.
Link to U.S.-China Joint Statement and Reciprocal Tariff E.O. U.S.-China Joint Statement and Reciprocal Tariff E.O.
Separately, on May 12, The White House issued the Joint Statement on U.S.-China Economic Trade Meeting in Geneva (the “Joint Statement”), announcing an agreement between the U.S. and PRC governments to remove certain existing tariffs and countermeasures for an initial 90-day period. That same day, President Trump issued the PRC Reciprocal Tariff EO.
As detailed in our prior blog post of April 4, 2025, due to various rounds of retaliation by the Chinese government against the U.S. reciprocal tariffs announced by the United States in April, the U.S. government continued to raise tariffs on Chinese-origin products, with reciprocal rates increased to 125% for Chinese-origin items. These tariffs were imposed in addition to the 20% tariffs implemented due to the national emergency declared to respond to the “extraordinary threat posed by illegal aliens and drugs,” described in our blog posts of February 6 and March 5, 2025.
In the PRC Reciprocal Tariff EO, President Trump modified reciprocal tariffs on Chinese-origin products by suspending the country-specific tariff of 125%, effective 12:01 a.m. EDT on May 14, 2025, for a period of 90 days, and replacing it instead with a 10% reciprocal tariff. The 20% additional tariffs also will remain in place, for a total tariff of 30% on top of existing tariffs imposed under Section 301 of the Trade Act of 1974, as well as applicable Section 232 tariffs. The PRC Reciprocal Tariff EO also provides for a decrease in the tariffs applicable to de minimis shipments.
Beyond that, the U.S. and PRC governments agreed in the Joint Statement to establish a “mechanism to continue discussions about economic and trade relations” on a going-forward basis.
Cleary’s international trade team is continuing to track developments on the Trump administration’s tariff policy, and is available to provide guidance on navigating the impact of the new tariffs.