On April 2, former President Donald Trump tweeted his intention to impose a new wave of tariffs on America’s trading partners. It became one of the most defining moves of the UK economic policy. The recently introduced tariffs represent a minimum 10% tax on all goods sent to the United States. Country-specific tariffs will be next, though their rollout has been postponed until the beginning of July.
British business and consumers are already bearing the brunt these tariffs. In fact, they’re accelerating a historic slump in UK goods exports to the US. According to the Office for National Statistics, UK goods exports dropped by £2 billion ($2.7 billion) in April. This decrease occurred in March of 2022. That was the biggest fall in UK goods exports to the US since records started in 1997.
Beyond the baseline UK tariff on imports from Britain, Trump agreed to remove US tariffs on UK steel and aluminum. Even with this concession, specialists stress that the total effect of the tariffs continues to create obstacles for UK exporters. Yael Selfin, the chief economist at KPMG UK, reminded people of this significant truth. Tariffs on UK exports to America remain elevated, compared to the situation before the announcements were made in April.
The timing of these tariffs has raised serious questions about their long-term impacts on our trade relations. Rachel Reeves pointed to the uncertainty around tariffs as a key driver of poor economic performance.
“There was a huge uncertainty about tariffs… If you dig into those GDP numbers today, (we see) exports weakening and also production weakening because of that uncertainty in the world around tariffs,” – Rachel Reeves.
The United Kingdom has found a successful approach to the new trade conditions. Plus, it has managed to tackle these stresses better than any other developed country. It has been the first nation to establish a trade agreement blueprint with Washington. This agreement contained a British promise to reduce tariffs on certain imports of British produced cars.
Analysts predict that the recently introduced tariffs will further undermine UK trade. Given the ongoing pressures of inflation, this trend will almost certainly continue in the medium term. Increased costs and reduced demand from American consumers would make it more difficult for British export levels to fully recover.