The United Kingdom may emerge as a surprising beneficiary of the ongoing trade tensions initiated by former U.S. President Donald Trump. With the U.S. imposing tariffs on various countries, the U.K. finds itself in a potentially advantageous position. This comes as the U.K.’s service-focused economy, which greatly outweighs its goods export value to the U.S., offers a level of protection from tariffs. As Trump’s trade policies reshape global economic dynamics, analysts suggest that the U.K. could see increased investment and growth opportunities.
The U.K.'s five biggest goods exports to America—cars, medicines, mechanical power generators, scientific instruments, and aircraft—totaled £25.6 billion ($31.8 billion). However, this figure is eclipsed by its services exports to the U.S., which have a combined value of £109.6 billion. This substantial difference highlights the U.K.'s economic reliance on services rather than goods.
In the year leading up to September 2024, the United States was the U.K.'s largest trading partner, accounting for over 17% of the U.K.'s total trade. Despite concerns about potential tariffs, the U.K. maintains a relatively balanced trade relationship with the U.S. This balance, combined with the U.K.'s service-oriented economy, means it is largely insulated from the direct impacts of tariffs.
"The service-focused nature of the U.K. economy shields it significantly from the consequences of tariffs." – Neri Karra Sillaman, University of Oxford's Said Business School
The U.K. has a "fighting chance" of avoiding U.S. tariffs, making it an attractive market for investors amid global trade uncertainties. If the U.K. remains tariff-free, it could uniquely position itself to attract investment, talent, and new trade partnerships.
"If the U.K. remains tariff-free, it could be uniquely positioned to attract investment, talent, and new trade partnerships." – Neri Karra Sillaman, University of Oxford's Said Business School
Should the U.K. avoid tariffs, it stands ready to benefit from similar routing practices used by countries seeking to bypass restrictions. Alex King, a former FX trader, notes that Chinese manufacturers redirected their goods through Vietnam and Thailand to avoid tariffs when the U.S. first imposed them on China.
"When the U.S. first imposed tariffs on China, Chinese manufacturers routed many of their goods through Vietnam and Thailand to the U.S. to avoid tariffs." – Alex King, former FX trader and founder of personal finance platform Generation Money
The potential for greater inward investment into the U.K. is also on the horizon if tariffs worsen and become a more permanent fixture in global trade. The British pound has already strengthened against the U.S. dollar following Trump's initial tariff confirmations, signaling investor confidence in the U.K.'s economic prospects.
Several sectors within the U.K., including automotive, aerospace, and financial industries, could benefit from increased demand if American buyers look beyond tariff-affected suppliers.
"Sectors like luxury, fashion, pharmaceuticals, and advanced manufacturing — where the U.K. already excels — could see an influx of investment and trade opportunities." – Neri Karra Sillaman, University of Oxford's Said Business School
While Trump's statement about tariffs on the EU suggests inevitable duties, he indicated that a deal could be negotiated with the U.K., providing further assurance to investors.
"The U.K. is out of line. But I'm sure that one, I think, that one can be worked out." – Donald Trump, U.S. President
Increased demand for British goods and services could provide a much-needed boost to the U.K. economy during uncertain times.
"We have seen these patterns before — every trade war shifts the global economic balance, and this could be a moment for the U.K. to capitalize on change, be an active player rather than a bystander." – Neri Karra Sillaman, University of Oxford's Said Business School