Trade tariffs proposed by former US President Donald Trump could affect British goods exports to the US as much as Brexit has hurt UK sales to the EU, new research has shown.
The analysis by the Decision Foundation warns that if Trump reimposes global tariffs between 10 and 20 percent, Britain could face trade barriers on a par with non-tariff obstacles imposed by the EU Trade and Cooperation Agreement.
The stark assessment suggests that these potential US import duties would largely target British goods, reflecting the impact of Brexit on trade in manufactured products destined for Europe. In contrast, Britain’s service sector continued to flourish. UK services exports have expanded by 7.5 per cent annually since 2019, exceeding the OECD average of 6.1 per cent, and services now make up 54 per cent of total UK exports.
This difference seems to be deepening. While the fallout from Brexit has greatly impacted goods exports, service-oriented businesses have been relatively isolated. Many of them have been able to avoid complex post-Brexit restrictions by setting up subsidiaries in the EU – an approach that protects their EU trade while doing little to support local UK employment.
With the possibility of new US tariffs on goods, the gap between goods and services trade in Britain is set to widen further. Economists at the Decision Foundation conclude that a generalized US tariff of 10% to 20% could impose a shock on sales of British goods to the United States similar in size to the one that Brexit inflicted on exports to Europe. The EU still accounts for almost half of the UK’s total goods exports, making the question of how to mitigate these blows increasingly urgent.
The think tank calls on the UK government to prioritize easing export barriers with Europe while at the same time exploring strategies that support significant growth in services sales abroad. UK service exports to markets such as Singapore, the US and India have risen since 2016, while best-performing sectors – including insurance, pensions and “other business services” such as legal advice – have taken global market share from European and US rivals.
“The government must respond by doing what it can to avoid taking the side of tariffs, facilitating cross-channel trade in goods and taking a truly global approach to reducing barriers to the flow of services,” said Emily Fry, chief economist at the Decision Foundation. Trade within and outside Britain.
With Britain’s services sector proving its relative resilience, the policy priority now is to ensure that any new rounds of protectionism – on both sides of the Atlantic – do not undermine the UK’s fragile goods sector or reverse the encouraging progress it has made in selling high-value services to countries. Members of the European Union. Rest of the world.