UK industries ‘vulnerable’ as exports to US hit £59bn
Goods trade between America and Britain dropped slightly in 2024 compared to the previous year ahead of a potential deterioration in UK exports if ten per cent tariffs kick into effect in three months.
President Donald Trump provided all countries except China, Canada and Mexico temporary reprieve from tariffs after US treasury yields spiked and pushed up the cost of borrowing.
But new official data has suggested that a number of key UK industries are exposed to the worst effects of tariffs should a trade deal not be agreed between the Labour government and the Trump administration.
The Office for National Statistics (ONS) showed that machinery and transport equipment accounted for nearly half of all goods exports to the US in 2024, which was valued at £59.3bn.
It suggests that tariffs could hurt several manufacturers which build turbines and internal combustion engines.
Chemicals, which includes vaccines and other key medicines, were the second largest commodity exported.
Goods exports to the US saw a small drop of 3.7 per cent compared to levels seen in 2023.
The UK had a small goods trade surplus with the US as it imported £57.1bn in products.
The ONS said there was a surplus of £77.9bn when services are taken into account while the US Bureau of Economic Analysis (BEA) reported a UK surplus of around £12bn by comparison.
The UK stats body explained that differences in numbers can be caused by different “estimation practices” as measurements of trade are “complex”.
Trade negotiations require ‘pragmatism’
Extra tariffs of 25 per cent imposed on car imports and steel have been kept by President Trump.
The US was UK carmakers’ largest foreign market as it made up more than a quarter of all car exports.
Over a three-year period, the US has also become a more important trade partner for UK manufacturers as the share of UK goods exported to the US compared to other countries increased from 13.8 per cent to 16.2 per cent.
President Trump is determined to reduce US trade deficits with several countries. The goods trade deficit with the UK is significantly smaller than the total imbalance worth more than £250bn between the US and China.
The US president has exempted services from his sweeping tariffs, among a number of other products.
Chancellor Rachel Reeves is set to meet her US counterpart Scott Bessent in Washington DC on Friday where she is expected to advance trade deal negotiations.
In an interview with the BBC, Reeves said she was keen to lower trade barriers while maintaining high quality standards.
“The US administration respect and understand that we have high standards to support British farming, and to support British consumers, and we’re not going to be relaxing those standards,” she said.
Lindsay James, an investment strategist at Quilter, said the discussions were “crucial” as new data exposed which industries were “most vulnerable” to a heightened trade war.
“This data serves as a timely reminder of the importance of navigating trade negotiations with precision and pragmatism,” James said.