The US has paused implementation of its technology cooperation agreement, the so-called Tech Prosperity Deal, with the UK citing frustration over stalled broader trade negotiations and unresolved regulatory differences. Officials in Washington confirmed the suspension last week, saying progress on issues such as market access and non-tariff barriers was insufficient to move the pact forward.
The agreement was announced in September during President Donald Trump’s state visit to the UK and was designed to deepen collaboration on emerging technologies, including artificial intelligence (AI), quantum computing, and civil nuclear energy. It had been presented in London as a key component in strengthening transatlantic tech ties.
Both governments described the deal as a framework rather than a formal treaty. It included commitments from major US tech firms to invest in the UK, with projected capital flows in the tens of billions of pounds. Microsoft, NVIDIA, Google, OpenAI, and other companies publicly pledged investment plans during the announcement.
A core part of the agreement was the creation of an AI growth zone in the north-east of England, which was intended to catalyse private sector development and leverage the UK’s research base. Early projections suggested the initiative could attract substantial capital and job creation, particularly in high-performance computing and AI infrastructure.
Washington’s decision reflects growing dissatisfaction with the progress of negotiations in other areas of the UK-US economic relationship. US officials have made it clear that implementation of the tech deal was linked to concessions on broader trade issues that remain unresolved. These include disagreements over the UK’s digital services tax, food safety standards, and other regulatory measures that the US sees as barriers to market access.
Critics in Washington had previously objected to the UK’s digital services tax, a levy on large technology companies that is forecast to generate hundreds of millions of pounds annually. Although UK officials have pushed back on claims that the tax was the principal stumbling block.
The US administration’s move follows months of intensive diplomatic engagement. Negotiators on both sides have been working hard to iron out differences in order to avoid punitive tariffs and bolster bilateral economic ties. Despite these efforts, Washington concluded that advancement of the technology agreement could not proceed without progress on wider trade terms.
Prime Minister Keir Starmer had described the pact at the time of signing as a major step in UK-US relations. He emphasised the opportunities it would bring for jobs, research collaboration, and private investment in emerging sectors. UK officials still characterise the current pause as part of constructive negotiation rather than a collapse of the deal.
The UK government has stressed its commitment to making the partnership work, and Downing Street said talks with Washington would continue. Officials are expected to pursue further discussions in the coming months to resolve outstanding trade issues and unlock the tech cooperation measures.
The pause has drawn attention to the wider context of UK-US economic relations, which include ongoing discussions on tariffs and market access across a range of sectors beyond technology, and highlights the complexity of linking high-technology collaboration with broader trade negotiations that touch on sovereignty, regulatory policy, and domestic economic priorities.
For British policymakers and industry stakeholders, the suspension raises questions about the future of the UK’s bid to become a global AI hub and to leverage foreign investment for strategic sectors. How London balances regulatory autonomy with the desire for closer alignment with US economic and technology policy will be a key theme in forthcoming negotiations.
As both sides prepare for further talks early next year, the focus will be on reconciling divergent approaches to taxation, regulation, and market access – and on sustaining the “special relationship” at a time when domestic economic agendas in both countries are under pressure.
