The UK runs a trade deficit in most key product groups. Its key exports include cars (£32.9bn in 2024), mechanical power generators (intermediate goods in the chart – £32.7bn) and medicinal and pharmaceutical products (part of semi-manufacturers in the  chart, £24.6bn), while the most valuable imports are also cars (£44.4bn) and medicinal and pharmaceutical products (£27.2bn).

Both the UK and the US report a surplus in trade in goods with the other country, according to their official statistics. Data from the UK’s Office for National Statistics (ONS) suggest that the UK had a small surplus of £2.2bn in 2024, whereas the US Census Bureau reports a modest US surplus of $11.9bn. The difference stems from factors such as the treatment of UK Crown Dependencies and variations in estimation practices.

Of the £59.3bn of goods that the UK exported to the US in 2024, machinery and transport equipment accounted for much the largest amount at £29.1bn, followed by chemicals (£10.8bn) and materials (£4.7bn).

President Trump has announced wide-ranging tariffs on goods being imported into the US since taking office in 2025. Tariffs are taxes on imports, which are paid by the importing businesses in the country where they apply.

The global minimum 10% tariff that President Trump announced excludes goods that are already subject to steel, aluminium and automobile duties. For now, copper, pharmaceuticals, semiconductors, timber, energy and energy products are also excluded.

Prior to these announcements, US tariffs were generally low at around 2.2% in 2023, although tariffs on agricultural products were higher.

On 9 April the US stated that tariffs above the global universal level of Trump’s 10% would be suspended for 90 days (until early July) to give time for negotiations with countries that had not retaliated.

We have analysed the potential impact of the blanket 10% tariffs on UK goods exports to the US. For simplicity, we assume that trade in services will not be affected by these tariffs.

UK goods exports to the US amounted to £59.3bn in 2024. A quick calculation suggests that UK exports may fall by around £12bn as a result of these tariffs – slightly under 0.5% of UK GDP. Our calculation assumes that UK businesses pass on the full impact of the tariffs to US buyers, although this may not be the case in reality, as UK exporters might reduce their prices to remain competitive in the US market.

In March, the UK Office for Budget Responsibility (OBR) calculated that UK exports to the US could fall by 8% – equivalent to a 0.2% fall in GDP – if the US applies a 20% tariff to UK goods. Transportation equipment, chemicals (which includes medicinal and pharmaceutical products), machinery, and electronics an electrical machinery would be likely to most impacted.

In May the UK announced trade engagements with the EU, US and India. While varying in scope and ambition, they show how the UK’s trading relationships are changing in a post-Brexit world.

The UK and the US recently forged a limited trade deal, signalling a selective approach to bilateral economic engagement. The deal involves rolling back a small number of the tariffs announced in March and April, but the US is maintaining its baseline 10% tariff on most other UK products. This deal is therefore more of a targeted sector-based agreement than a comprehensive free trade agreement. It hints at piecemeal trade arrangements rather than sweeping trade liberalisation.

In contrast, the UK-India trade deal appears to be more ambitious and strategic, encompassing a broad free trade agreement aimed at long-term economic partnership. It includes phased tariff reductions across a number of goods, including UK exports like whisky and cars, coupled with commitments on investment and services.

As a result of the UK-EU ‘re-set’ deal, the UK government estimates there will be a boost to GDP of £9bn by 2040 – equivalent to 0.3% of GDP, or an extra 0.02% of GDP per year. In other words, the deal itself will barely have an impact on economic growth, employment, inflation and interest rates. However, it might be viewed as the start of a process of economic reintegration with the EU, although there would be obvious political complications if this were the case.

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