As Chancellor Rachel Reeves meets her counterpart, US treasury secretary Scott Bessent to debate an “economic agreement” between the 2 international locations, the most recent commerce figures verify three realities that should form negotiations.
The primary is that the US stays a significant buyer for UK companies, the biggest single-nation export marketplace for British items and the third-largest import associate, crucial to the UK automotive trade, already landed with a 25% tariff, and prescription drugs, which could but be.
In 2024, the US was the UK’s largest export marketplace for vehicles, price £9bn to corporations together with Jaguar Land Rover, Bentley and Aston Martin, and accounting for greater than 27% of UK automotive exports.
Little marvel the home trade fears a heavy and speedy affect on gross sales and jobs ought to tariffs stay.
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American automobile exports to the UK in contrast are price simply £1bn, which can clarify why the chancellor could also be prepared to decrease the present tariff of 10% to 2.5%.
For UK medicines and pharmaceutical producers in the meantime, the US was a greater than £6bn market in 2024. At the moment exempt from tariffs, whereas Mr Trump and his advisers take into consideration how one can deal with an trade he has long-criticised for top costs, it stays susceptible.
The second level is that the US is much more necessary for the companies trade. British exports of consultancy, PR, monetary and different skilled companies to America had been price £131bn final 12 months.
That’s greater than double the whole worth of the products traded in the identical path, however mercifully companies are a lot tougher to hammer with the blunt instrument of tariffs, although not immune from regulation and different “non-tariff barriers”.
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The third level is that, had Donald Trump caught to his preliminary rationale for tariffs, UK exporters shouldn’t be dealing with a penny of additional price for doing enterprise with the US.
The president says he slapped blanket tariffs on each nation bar Russia to “rebalance” the US financial system and reverse items commerce ‘deficits’ – by which the US imports greater than it exports to a given nation.
That closely contested argument would possibly apply to Mexico, Canada, China and lots of different manufacturing nations, but it surely doesn’t meaningfully apply to Britain.
Figures from the Workplace for Nationwide Statistics present the US ran a small items commerce deficit with the UK in 2024 of £2.2bn, importing £59.3bn of products towards exports of £57.1bn.
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Add in companies commerce, by which the UK exports greater than double what it imports from the US, and the UK’s surplus – and thus the US ‘deficit’ – swells to almost £78bn.
That could be an issue had been it not for the US’ personal accounts of the products and companies commerce with Britain, which it says really present a $15bn (£11.8bn) surplus with the UK.
You would possibly assume that they can’t each be proper, however the ONS disagrees. The disparity is brought on by the best way the US Bureau of Financial Evaluation accounts for companies, in addition to a spread of statistical assumptions.
“The presence of trade asymmetries does not indicate that either country is inaccurate in their estimation,” the ONS stated.
That could be encouraging had Mr Trump not ignored his personal arguments and landed the UK, like everybody else on the planet, with a blanket 10% tariff on all items.
Commerce agreements are notoriously complicated, protracted affairs, which helps clarify why after 9 years of attempting, the UK nonetheless has not obtained one with the US, and the Brexit deal it did with the EU towards a self-imposed deadline has been proved extremely disadvantageous.
