As Chancellor Rachel Reeves meets her counterpart, US Treasury secretary Scott Bessent to debate an “economic agreement” between the 2 nations, the most recent commerce figures verify three realities that should form negotiations.
The primary is that the US stays an important buyer for UK companies, the biggest single-nation export marketplace for British items and the third-largest import accomplice, important to the UK automotive trade, already landed with a 25% tariff, and prescribed drugs, which could but be.
In 2024 the US was the UK’s largest export marketplace for vehicles, price £9bn to firms together with Jaguar Land Rover, Bentley and Aston Martin, and accounting for greater than 27% of UK automotive exports.
Little marvel the home trade fears a heavy and quick impression on gross sales and jobs ought to tariffs stay.
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American automobile exports to the UK against this are price simply £1bn, which can clarify why the chancellor could also be keen to decrease the present tariff of 10% to 2.5%.
For UK medicines and pharmaceutical producers in the meantime, the US was a greater than £6bn market in 2024. At present exempt from tariffs, whereas Mr Trump and his advisors take into consideration methods to deal with an trade he has long-criticised for top costs, it stays susceptible.
The second level is that the US is much more vital for the companies trade. British exports of consultancy, PR, monetary and different skilled companies to America have been price £131bn final yr.
That is greater than double the entire worth of the products traded in the identical course, however mercifully companies are a lot more durable to hammer with the blunt device of tariffs, although not immune from regulation and different “non-tariff barriers”.
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The third level is that, had Donald Trump caught to his preliminary rationale for tariffs, UK exporters shouldn’t be dealing with a penny of additional value for doing enterprise with the US.
The president says he slapped blanket tariffs on each nation bar Russia to “rebalance” the US economic system and reverse items commerce ‘deficits’ – through which the US imports greater than it exports to a given nation.
That closely contested argument may apply to Mexico, Canada, China and lots of different manufacturing nations, but it surely doesn’t meaningfully apply to Britain.
Figures from the Workplace for Nationwide Statistics present the US ran a small items commerce deficit with the UK in 2024 of £2.2bn, importing £59.3bn of products towards exports of £57.1bn.
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Add in companies commerce, through which the UK exports greater than double what it imports from the US, and the UK’s surplus – and thus the US ‘deficit’ – swells to just about £78bn.
That is likely to be an issue have been it not for the US’ personal accounts of the products and companies commerce with Britain, which it says really present a $15bn (£11.8bn) surplus with the UK.
You may assume that they can not each be proper, however the ONS disagrees. The disparity is brought on by the best way the US Bureau of Financial Evaluation accounts for companies, in addition to a variety of statistical assumptions.
“The presence of trade asymmetries does not indicate that either country is inaccurate in their estimation,” the ONS stated.
That is likely to be encouraging had Mr Trump not ignored his personal arguments and landed the UK, like everybody else on this planet, with a blanket 10% tariff on all items.
Commerce agreements are notoriously advanced, protracted affairs, which helps clarify why after 9 years of making an attempt the UK nonetheless has not received one with the US, and the Brexit deal it did with the EU towards a self-imposed deadline has been proved extremely disadvantageous.
