In April 2025, the United Kingdom experienced a large drop in exports. The value of all goods exported fell by £2.7 billion, an 8.8% decrease. This drop on exports affected trade with both the European Union and non-EU countries. Exports to the United States were hit especially hard. The UK’s exports to the US alone dropped by £2.0 billion during this period, largely attributed to the implementation of President Trump’s ‘Liberation Day’ 10% blanket tariff on imported goods.
The effects of the tariff introduction have been far-reaching. As UK exports dried up, the trade deficit grew larger. In the three months leading up to April 2025, the combined goods and services trade deficit grew by over £4.9 billion. It then rocketed to an all-time high of £11.5 billion. Imports grew faster than exports, contributing to this overall decline. This shift is worrying for the long-term health of the UK economy as a whole.
April’s figures painted a deeply troubling picture of the UK’s economic future. Combined, they indicate that monthly real GDP has already contracted by at least 0.3%. The disappearing export market and the exploding trade deficit pose a dilemma for the Chancellor. He is still reeling from the very negative labour market data that came out earlier this week and the consequences of a newly-announced Spending Review.
Global trade tensions are alleviating, thanks in part to a short-lived truce between the US and China. UK businesses are still nervous. The boost from the ratification of the country’s trade deal is providing some much-needed calm. Inflationary pressures are set to drive costs up in the very near future. On top of this, firms are preparing for the looming national insurance tax increases and ongoing confusion over tariff regimes.
Economists caution against overcelebration. The recent cooling of global trade tensions could bring a welcome reprieve. UK firms still face a challenging environment that risks limiting their ability to reach the potential for rapid growth. Increasing costs and tariff confusion are creating perilous times for businesses. This unforgiving climate creates obstacles for them to grow and bounce back.
As the situation develops, stakeholders across various sectors will be keenly observing any changes in trade policies or economic indicators that could signal a shift in fortunes for UK exports. The Chancellor will need to address these pressing concerns in order to restore confidence among businesses and stabilize the economy.