UK exports to US drop to lowest since 2022 amid Trump tariffs and new trade deal

The value of UK exports to the United States has fallen sharply, reaching its lowest point since February 2022 following the introduction of sweeping tariffs by President Trump. Official trade figures reveal a 15 per cent decline, equivalent to £700 million, in UK goods exported to the US during June this year.

This drop came before the recently negotiated trade deal between Prime Minister Sir Keir Starmer and President Trump took effect on 30 June. The new agreement limits most tariffs on British goods exports to 10 per cent, a notable rise from the 1 per cent average faced before the US president’s string of protectionist tariffs came into play from April. Across the second quarter, UK exports to America contracted by £4.7 billion, highlighting the impact of these new trading conditions.

Automotive sales and the metal industry have been particularly affected, with the Office for National Statistics reporting a £200 million decline in June exports of machinery, transport equipment, and chemicals. The trade deal, finalised in May, has since lowered tariffs on most British car exports from 27.5 per cent to 10 per cent and eradicated levies on steel and aluminium.

William Bain, head of trade policy at the British Chambers of Commerce, commented that the full implementation of the UK-US trade deal is now crucial for improving export prospects, especially for steel and aluminium goods. He sees this agreement as a basis to push for further reform on tariffs between the two nations, particularly in sectors where competition is minimal.

Britain’s overall trade deficit widened by £1.7 billion to £9.2 billion in the second quarter, largely due to a sharper rise in imports than exports. The ONS noted that goods exports to the European Union went up by £1.5 billion, or 3.6 per cent, over the same period. However, trade in goods remains an area of persistent deficit for the UK in recent decades, while the country’s surplus in services rose by £4.1 billion to £51.9 billion in the quarter.

Earlier this year, UK exports to America had briefly surged as US companies raced to buy British goods ahead of the new tariffs. Net trade contributed 0.34 per cent to GDP growth in the first quarter and a small 0.02 percentage point boost in the second. However, Anna Titareva of UBS warns that increasing protectionism is likely to become a drag on the UK economy for the remainder of the year and is expected to weigh on growth through 2026 and 2027.

The Office for National Statistics reports that almost a third of UK companies exporting to the US have already been impacted by the new tariffs and are bracing themselves for higher costs ahead. These changes signal a challenging road for British exporters seeking to navigate a landscape marked by heightened protectionism and shifting trade relationships.