The United Kingdom’s trade landscape is undergoing significant strain, primarily due to the ongoing repercussions of Donald Trump‘s trade policies. That’s not the picture painted by recent data, which tells us that the UK’s gross domestic product (GDP) shrank by an estimated 0.3% in April. Consequently, specialists expect UK trade to face long lasting medium term headwinds.
Rachel Reeves, Britain’s shadow finance minister, called April a “dark month” for the economy. On the latter point, she emphasized that the confusion and unpredictability caused by tariffs have resulted in depressed exports and lower production rates. So too has the Office for National Statistics, announcing a fall in GDP. This plummet comes almost certainly as a result of the new tariffs placed on British goods sent to the United States.
UK goods exports to the US plunged in the largest ever fall of this kind as a result of this extraordinary turnaround. They plunged by a record £2 billion ($2.7 billion) from March to April. That accounts for the biggest fall in UK goods exports to the US since records began in 1997. This drop started immediately after Trump slapped new tariffs on April 2. This proclamation featured a base 10% tariff on goods being imported into the US. Little consolation all around, to be honest, as the UK has been on the whole pretty lucky here, with Trump agreeing to remove tariffs on UK steel and aluminium.
We asked Yael Selfin, chief economist at KPMG UK, to reflect on what these changes might mean for the future. She stated, “This is expected to act as a headwind for UK trade in the medium term.” Selfin remarked that the agreement to remove some of these increasingly subjective tariffs provides British businesses with greater policy certainty. On balance, the overall trade environment remains deeply contentious, fraught, and complex.
The unpredictable application of tariffs has burdened UK businesses and consumers alike. Reeves emphasized the impact of this uncertainty when she stated, “There was a 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.”
In particular, UK officials are working under extreme economic duress. Now, they’re figuring out how to reduce the harmful effects of escalating international trade conflicts. Ongoing discussions between the UK and US may shape future trade relations and potentially alleviate some burdens on British exporters.