UK pharmaceutical exports to the US are to benefit from a 0% tariff rate for at least three years after the two countries reached a deal following talks that will also see medtech exports from the UK to the US escape further new levies.

Announced on 1 December, the arrangement – which the US has described as an “agreement in principle” – is part of the wider UK-US Economic Prosperity Deal, agreed in May. According to a statement, the UK is also increasing the “net price it pays for new medicines by 25%.”

Liz Kendall, the UK’s science and technology secretary, said the deal will “ensure UK patients get the cutting-edge medicines they need sooner, and our world-leading UK firms keep developing the treatments that can change lives.”

“It will also enable and incentivise life sciences companies to continue to invest and innovate right here in the UK,” Kendall added.

The US represents a major market for the UK’s life sciences sector. According to the UK’s Department of Business and Trade, exports of medicinal and pharmaceutical products to the US hit £11.1bn in the four quarters ending Q2 2025, accounting for 17.4% of total goods exports.

The news has been welcomed by stakeholders including the Association of the British Pharmaceutical Industry (ABPI). “The deal is an important step towards ensuring patients can access innovative medicines needed to improve wider NHS health outcomes,” Richard Torbett, the ABPI’s chief executive, said.

“It should also put the UK in a stronger position to attract and retain global life science investment and advanced medicinal research,” Torbett added.  

William Bain, head of trade policy at the British Chambers of Commerce, is also optimistic about the agreement and its impact on UK businesses.

“This deal is a real win,” he said. “It will promote exports, boost investment, and enhance UK competitiveness as a production and innovation base for world-leading medicines and treatments.”

The agreement between the UK and US comes at a time when international trade has been disrupted by geopolitical tensions and US tariff policy, with economies large and small working to adjust to this new reality.

Peter Kyle, the UK’s business and trade secretary, said the newly announced deal “guarantees that UK pharmaceutical exports – worth at least £5bn a year – will enter the US tariff free, protecting jobs, boosting investment and paving the way for the UK to become a global hub for life sciences.”

For Ruth Benbow, Navigator Global’s ecosystem development director for North America, the exclusion of the UK from any future Section 301 investigations into pharmaceutical pricing practices – a mechanism looking into targeted unfair policies or practices that frustrate US commerce – during President Donald Trump’s term is interesting.

“Currently, there aren’t any investigations into these practices,” she said. “So is this the UK protecting themselves or could the United States be signalling to others its intentions regarding investigations expected in 2026?”