On 8 May 2025, the United Kingdom (UK) and the United States (U.S.) announced a new trade agreement. While much of the news coverage has focused on tariffs for steel, cars, and agricultural goods, there’s are also reasons to be optimistic for small tech businesses on both sides of the Atlantic.
Why it matters for small tech
The U.S. and UK have a significant trade relationship. The U.S. is the UK’s largest trade partner, and the UK is one of the main destinations for American exports. What’s more, the U.S. and UK are the only two Western nations with tech sectors valued at over $1 trillion. This means there is a lot of opportunity for tech small and medium-sized enterprises (SMEs) if they could gain better access to markets, funding, and innovation partnerships.
Although the agreement was light on digital specifics, Prime Minister Keir Starmer described it as a ‘springboard for a technology partnership to harness science and tech to create future industries and technologies’. That suggests opportunities for deeper collaboration in:
- Artificial Intelligence (AI) and quantum technologies
- Translating academic research into commercial applications
- Simplifying trade processes for digital-first businesses
What wasn’t said
Notably absent from the deal were any commitments on key digital issues, especially those affecting the UK’s regulatory environment for tech. There was no mention of the Digital Services Tax (DST), a 2 per cent tax on revenues from digital platforms like search engines, social media, and online marketplaces. Companies pay DST when they met two revenue criteria: receiving over £25m in revenues from UK customers and also having over £500m in global revenues.
Similarly, the agreement didn’t address wider challenges to transatlantic trade, such as regulatory divergence or barriers to data flows, issues that can increase compliance burdens and limit market access for smaller digital firms.
What is next?
For UK-based small tech companies, the United States is more than just a trading partner; it’s a critical market for growth, investment, and collaboration. This new trade deal sets the groundwork for a deeper relationship, with the potential to unlock new commercial opportunities and reduce barriers to scale.
At ACT | The App Association our members know that closer trade relations between the United States and UK will provide a boost for UK tech SMEs. That recognition is an encouraging signal that the government understands both the economic value of the tech sector and the role small businesses play in driving innovation.
The specifics of a full technology partnership may still be in development, but for now, the message is clear: the direction is trending upwards. As that path takes shape, we’ll continue working to ensure the voices of our members are at the table and that any future agreements deliver real value for small tech.