UK’s ‘Tech Prosperity Deal' with US hits rocky ground

There's huge uncertainty over the UK-US Tech Prosperity Deal, with reports that the US has pulled out.

The deal, signed in September, saw the two countries agreeing to establish joint R&D, and advance "pro-innovation AI policy frameworks". The plan also called for cooperation on quantum computing and nuclear energy.

At the time, US president Donald Trump said it would "ensure our countries lead the next great technological revolution side by side".

However, reports from the New York Times suggest that talks have stalled due to “broader disagreements”.

This is believed to be in part a reference to the UK's Digital Services Tax, levied at 2% on US tech giants including Google, Amazon, and Apple, and raising around £800 million per year.

Trump is reportedly not a fan of the Online Safety Act, which requires tech companies to protect users from harmful content.

According to the NYT, the US is also concerned about the Economic Prosperity Deal between the two countries. The MOU for the Technology Prosperity Deal made it dependent on “substantive progress” towards the Economic Prosperity Deal signed in May.

The US is reportedly unhappy with perceived trade barriers in sectors such as cars, pharmaceuticals, and steel.

The stalled talks on the deal may just be a tactic to put pressure on the UK, as implied by a statement on X by Trump's science adviser Michael Kratsios.

"In line with Section III of the US-UK Technology Prosperity Deal, we hope to resume work with the United Kingdom once the UK has made substantial progress in implementing its commitments under the Economic Prosperity Deal," he said.

"We look forward to continuing our productive collaboration across AI, quantum, nuclear, and other critical technology areas under the Deal."

Reports from the BBC on Tuesday noted that the deal is still very much alive and kicking. According to the broadcaster, the prime minister’s office said the UK remains in “active conversations with US counterparts at all levels of the government” on the deal.

Who benefits from the Tech Prosperity Deal?

The Tech Prosperity Deal has been widely seen as favorable to the US, Last month, experts told ITPro the agreement was a “strikingly unequal partnership” that allows big tech to expand its presence in the UK unchecked.

According to campaign group Global Justice Now, the UK should be wary of making any more concessions.

"For Trump, collaboration on trade and investment only appears possible if other countries give US corporate giants free reign over their economies – and give up their democratic right to regulate and tax them," said policy and campaigns manager Tim Bierley.

"The news that the US is seeking even more concessions should be a wake-up call for those in government who think we can appease our way out of tariff wars with Trump – the more we concede, the more corporate America will demand."

Broadly speaking, the tech industry is more favorable toward the deal. The Computer & Communications Industry Association (CCIA), which has called for the Digital Services Tax to be repealed, pointed out that other nations are scrapping similar taxes.

“The technology deal was good news for investment and innovation in both countries, and it is unfortunate that lack of progress in broader trade issues resulted in its implementation being suspended," said CCIA senior director Matthew Sinclair.

"The UK should do more to address barriers to trade in digital services, whether that is taxes that single out US multinationals or regulators wielding unprecedented powers without the guardrails that should protect companies against disproportionate or simply misguided attacks on their businesses.”

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