Britain’s economy experienced a challenging month in April, primarily due to the detrimental effects of Donald Trump’s trade war. Rachel Reeves, the country’s finance minister, reported that the UK’s Gross Domestic Product (GDP) contracted by an estimated 0.3%, marking the sharpest month-on-month decline since October 2023. This slide has led to the trade pessimists weeping over the future of UK trade. Experts should expect it to face significant challenges in the medium term.
This economic performance decline coincided with an unprecedentedly large drop in UK goods exports to the US. In April, the volume of these exports decreased by £2 billion ($2.7 billion) from March’s total. That would be the biggest drop in dollars since the data began in 1997. What’s going on, ONS? The Office for National Statistics published the most recent steep decline. They attributed this decline to the new tariffs on British exports to the US that Trump announced on April 2. Even though these tariffs were scheduled to go into effect this past July, businesses have started to experience the effects long before then.
Reeves emphasized the uncertainty created by these tariffs, stating, “There was huge uncertainty about tariffs… If you dig into those GDP numbers today, (we see) exports weakening and production weakening because of that uncertainty in the world around tariffs.” This uncertainty has created a rain cloud over the businesses and consumers throughout the UK, resulting in a gloomy economic forecast.
Yael Selfin, the chief economist at KPMG UK, echoed this notion, saying the trade deal between the UK and US gives British businesses policy certainty to plan. She kept telling us that it wouldn’t all solve problems created by high tariffs. “This is expected to act as a headwind for UK trade in the medium term,” she stated, highlighting concerns about the ongoing impact of Trump’s tariffs.
The Britain–America trade deal specifically includes a pledge to lower food standards. This deal goes directly after some UK car imports. Unfortunately, the new tariffs on UK exports to America are still higher than they were prior to April, making an already complex trade relationship even more so.
Britain’s current course through these stormy economic seas is extremely concerning. At the same time, Trump’s trade policies are upending the environment where UK firms operate and compete—and how well they can export. It’s too early to tell what the long-term effects of all of these developments will be, but there’s no denying the challenges facing us right now.