Britain’s economy fell off a cliff in April. This decline occurred purely as a result of the trade war that former President Donald Trump has waged since 2018. The capital’s economy mirrors the national picture as the UK’s Gross Domestic Product (GDP) shrank by an estimated 0.3% last month. This economic contraction will combine to produce serious medium term headwinds for UK trade.
UK Trade data reveals that UK goods exports to the United States fell off a cliff in April. They were down £2 billion ($2.7 billion) from March. This fall constitutes the biggest decrease of UK exports to the US since records started back in 1997. The Office for National Statistics indicated that this fall is “likely linked to the implementation of tariffs” on Britain’s exports to the US, which were heightened following Trump’s announcement of new tariffs on April 2.
Britain’s finance minister, Rachel Reeves, called April a “difficult month.” She pointed to uncertainty over tariffs – especially with respect to the China trade war – as one of the key factors driving the economic carnage.
“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.
Trump kicked off the trade spat with a 10% baseline tariff on goods imported to the US. That one change alone increased the trade environment gristly extensive and really reinstalling. So far, the UK has succeeded at getting a better deal than virtually every other country – just the baseline tariff. UK businesses continue to suffer as a result of erratic tariff regimes.
Yael Selfin, chief economist at KPMG UK, noted that the agreement between the US and the UK concerning tariffs on steel and aluminum provided a degree of policy certainty for British businesses. She warned that these tariffs are bound to negatively impact UK trade. The cumulative effect will likely be seen over the medium term.
“This is expected to act as a headwind for UK trade in the medium term,” – Yael Selfin.
These tariffs affect a lot more beyond exports. In doing so, they’ve proven tiresomely opportunistic, greatly weighing down businesses and consumers across the UK. The cloud of confusion caused by the Trump administration’s sudden trade policy change remains a major hurdle to Britain’s economic security. For example, companies are facing volatility in cost and dynamic market challenges.