President Donald Trump has this week warned he may impose a 25% tariff on goods entering the United States from the EU. During a speech, he claimed that the EU “was formed to screw the United States” and argued that existing trade flows are unfairly weighted against American interests. While details of any forthcoming measures remain unclear, the very suggestion has raised alarms among businesses and policymakers across Europe.
So what does the current trading relationship between the two giant blocs look like? What is the current state of affairs, potential repercussions on both sides of the Atlantic, and how might UK exporters find themselves in a unique position – particularly as the UK has a smaller trade deficit with the US compared to the EU as a whole?
What’s going on?
President Trump’s comments were made in a public address, in which he criticised what he perceived as unfair EU trade practices. Central to his argument is the EU’s trade surplus with the US, which he views as evidence that American companies and workers are not receiving equitable treatment. By threatening tariffs of up to 25%, Trump appears to be pressuring Brussels to reconsider existing trade agreements or forge new pacts more favourable to the US.
These remarks have rekindled fears of an escalating trade conflict, similar to those seen during previous tariff disputes with Mexico and Canada where last-minute offers were presented to appease the Trump administration. At present, however, no official action has been taken, and it remains to be seen if the President’s comments will swiftly translate into concrete policy, or are simply another bargaining chip to get what he wants.
What does the current US/EU trade relationship look like?
Despite periodic disagreements, the US and the EU have traditionally enjoyed a robust economic partnership, exchanging high volumes of goods and services. This long-standing relationship is built on deeply intertwined supply chains and mutual dependence, although it has faced tensions on various fronts over the years.
The EU runs a significant trade surplus with the US, mainly driven by high-value exports such as automobiles, pharmaceuticals, and other manufactured goods. President Trump and others argue that this indicates the US is not getting a ‘fair deal’, although many economists point out that trade imbalances can stem from wider consumer demand patterns and complex global supply chains, rather than outright protectionism.
The most traded products between the two blocs are:
- From the EU to the US: Cars, machinery, chemicals, pharmaceuticals, and luxury consumer items consistently dominate export lists.
- From the US to the EU: American businesses send large volumes of aircraft, technology, medical equipment, agricultural products (like soybeans), and services.
Previous disputes, such as those over aircraft subsidies or digital services taxes, have occasionally strained relations, but rarely led to across-the-board tariffs on this scale. President Trump’s latest warning signals a potentially broader clash.
Potential impact of the proposed tariffs
Should the US enact 25% tariffs on EU goods, the consequences would likely be widespread, affecting companies, consumers, and entire industries both in Europe and America.
EU businesses
European exporters could face immediate cost increases that make their products less competitive in the US market. Industries already in the spotlight – particularly automotive and luxury goods – would likely feel the brunt of the impact, with smaller firms relying heavily on American sales at the greatest risk.
US businesses
While tariffs are aimed at protecting domestic production, they often push up input costs for American firms reliant on European components or raw materials. Increased prices could dent competitiveness and force companies to either absorb losses or pass higher costs to consumers.
Supply chain disruption
Many American and European production processes are interlinked, relying on parts sourced from multiple countries. Tariffs would add complexity, potentially prompting businesses to shift supply chains elsewhere – a costly and lengthy endeavour.
Risk of retaliation
Historically, major economies respond to tariffs with countermeasures, escalating a tit-for-tat cycle. The EU might retaliate by imposing tariffs on key US exports, such as agriculture, technology, or aviation products. Any such moves would add further unpredictability to the business environment on both sides.
Implications for UK-based businesses
The UK’s departure from the Single Market places British exporters in a distinct position: with a less pronounced trade deficit with the US, President Trump may not be as strongly targeted by British goods. If the EU faces steep tariffs and the UK avoids them, this divergence could create opportunities for British businesses to become a conduit for trade between Europe and America.
Potential as a gateway
- Re-exporting EU goods: If UK-based companies act as intermediaries, funnelling goods from the EU to the US, they could capitalise on avoiding direct tariffs—provided that rules of origin and customs obligations can be met without incurring the same duties.
- Rules of Origin complexities: However, navigating rules of origin is crucial. If components or finished products are largely EU-sourced, re-routing through the UK might not automatically sidestep American tariffs.
- Greater investment: If the UK is perceived as a more favourable transatlantic trade springboard, it may attract inward investment from EU businesses seeking to shield themselves from US tariffs. This could stimulate job creation and growth within Britain.
Still, these prospects hinge on the details of any new US–UK trade arrangements, as well as the exact scope of tariffs imposed on EU goods. UK exporters should remain watchful of these developments to gauge how they might leverage any comparative advantages.
Key takeaways for UK exporters
- Monitor policy announcements: Changes can happen swiftly. Stay abreast of official communications from both Washington and Brussels to anticipate potential shifts in tariff regimes.
- Assess supply chains: If you import components from the EU for re-export to the US, review the rules of origin to ensure compliance and limit unexpected costs.
- Plan for contingencies: Diversify trade partners and product lines where possible. Reducing dependence on a single market or region is a prudent strategy in uncertain times.
- Explore new opportunities: If the UK remains exempt from heightened US tariffs, it may be an opportune moment to strengthen relationships with American buyers or form partnerships with EU firms looking for a tariff-friendly route across the Atlantic.
While it remains unclear whether President Trump’s threat will materialise into widespread tariffs, the message is clear: the US–EU trade relationship could be on the cusp of a dramatic shift. For UK exporters, the priority should be staying informed, nimble, and prepared for the potential to both mitigate risks and seize new opportunities as the transatlantic trade landscape evolves.
The UK has officially joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
As of 15th December last year, the UK became the first European member with 11 other partners including Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
The joining of the trade bloc has been marked as a ‘red letter day’ by commentators, with the Head of Trade Policy at the British Chambers of Commerce, William Bain, noting: “There are few multi-national trade agreements like this one. It connects us to a fast-growing region of the global economy and will create new opportunities for both inward and outbound investment.”
The CPTPP trading bloc accounts for 15% of global economic output in a fast-growing region, with the deal expected to offer opportunities for UK SMEs to take advantage of reduced costs to import components and export manufactured goods.
Membership is expected to deliver a number of benefits for the UK and its businesses. Alongside a say in how the bloc develops and strengthens ties with growing economies, it will also open new markets for service providers, help diversify supply chains, and cut tariffs on goods exports. The deal is expected to deliver a £2bn boost to the UK economy each year.
There is particular interest in the opportunities to do more business with Vietnam and Malaysia, with Jennifer Lopez – CEO of the British Malaysian Chamber of Commerce – saying: “The entry-into-force of the UK’s membership into the CPTPP marks a groundbreaking achievement, transforming trade relationship and unlocking exciting opportunities for businesses in the UK and Malaysia.
“As this is the first-ever free trade agreement between Malaysia and the UK, it is a historic moment in elevating the longstanding partnership between our nations. It paves the way for collaboration in emerging sectors like digital trade, green technology, and advanced manufacturing.”
Capitalise on emerging markets
If you’ve spotted a potential opportunity to increase trade within the CPTPP bloc, Go Exporting can help make that a reality.
We have the experience and expertise to support you through the process from start to finish, from initial market research and entry strategy, through to customs and compliance, finding distributors, and driving sales.
Learn more about our international trade consultancy here.
UK exporters are facing an uphill battle right now as the latest available data for Q3 2024 showed steep declines in export volumes.
Data from the ONS showed a near 10% month-on-month decline in UK goods exports in September alone, which included a 10.9% fall in EU goods exports. Outside the EU, volumes fell by 8.7%.
A fall in machinery and transport equipment, fuel and chemical sales were noted as primary sources of decline.
Goods imported also fell but by a smaller amount, 3.1% overall including 1.4% from the EU.
Services bucked the trend somewhat with a 0.5% real-terms increase in activity, though the value of those exports is expected to have contracted slightly.
In terms of value, goods exported fell by £3.4bn following a rise in August, and the total goods and services trade deficit widened by £1.5bn to £11.4bn in Q3.
Head of Trade Policy at the BCC, William Bain, said of the latest figures that: “The UK’s broader economic slowdown in the third quarter of the year is clearly reflected in the trade data. September’s export data reflected the continued volatility in goods, in the last few months, with a further large drop in UK exports across the world.
“Taking Q3 overall, both goods and services exports fell, which is a real concern. There seems little sign so far of the uplift in global trade which economic forecasters predicted for the second half of 2024.
“The data points to the need for the Government’s promised Trade Strategy to deliver durable improvements in export performance and for stronger support measures to raise sales in key markets.
“It must also look at removing non-tariff trade barriers with the EU, and strong implementation of new trade deals with fast-growing markets. A concerted effort is needed to create the conditions so businesses can generate fresh exports.”
There was some better news in October’s trade data with Uk services export volume rising 2.5%.
Grow through the growing pains
It’s been a painful trading period for a number of exporters, but firms that are bold enough to grow through the growing pains are finding opportunities and seeing sales grow.
The key is to be strategic with growth plans, and only invest where real market potential exists.
Go Exporting specialises in helping companies to expand in international markets profitably; from export readiness, customs and compliance and market research through to devising and implementing strategy.
Learn more about our exporting growth plans here.
Donald Trump winning the 2024 presidential election so resoundingly was a shock to almost everyone aside from those who voted for him.
The fallout of this year’s race has been far more subdued than in 2021, but for businesses in the UK, and indeed the UK’s entire economy, there was a shock within the noise of the rhetoric that could have profound consequences if implemented.
As part of his winning pitch to the US electorate, Trump promised to impose a blanket 20% tariff on all imports into the US – a move which could cost the UK a substantial £22bn in lost exports. That was the immediate response. Analysis and comment pieces in the weeks since have been more mixed, with potential opportunities for UK firms and the UK economy itself.
Immediate reactions to the Trump tariff proposal
The announcement of a proposed 20% tariff on all imports into the United States prompted widespread alarm from policymakers and trade experts across the UK. The Centre for Inclusive Trade Policy (CITP) at the University of Sussex estimated the tariff could lead to a £22bn reduction in UK exports to the US. This amounts to a 2.6% contraction of overall export activity and underscores the potential disruption that could ripple through key industries heavily reliant on US trade. Sectors such as fishing, petroleum products, and mining are particularly vulnerable, with projected export reductions of 21.5%, 20.9%, and 20.4%, respectively. Potentially industry-closing levels.
For the UK’s broader economy, prospects mightn’t wouldn’t be much brighter. According to the National Institute of Economic and Social Research (NIESR), economic growth could fall to just 0.4% in 2025 if these tariffs take effect, compared to the 1.2% growth projected in a tariff-free scenario. Such an economic slowdown would compound challenges already posed by post-Brexit trade barriers, the ongoing energy crisis, and inflationary pressures. Businesses relying on transatlantic exports, including aerospace and automotive manufacturers, would face significant headwinds.
The immediate reaction among business leaders has been one of urgency and concern. Many firms have called for greater government support to help mitigate the fallout. This includes calls for financial assistance, supply chain realignments, and diversification of export markets. While government intervention can provide a temporary reprieve, many analysts caution that such measures alone may not be enough to counteract the systemic challenges posed by tariffs of this magnitude.
The response in Westminster has been similarly vocal. Trade experts and MPs alike have underscored the need for a diplomatic approach to prevent these tariffs from materialising. Discussions around reviving elements of the US-UK free trade agreement talks have gained traction, although analysts warn that the political appetite for bilateral trade deals under Trump may be limited. The UK government faces a delicate balancing act: maintaining its relationship with the US, while seeking alternative trade avenues if needed.
It would take a monumental diplomatic effort to get the UK some sort of tariff pass, especially given the comments made about Trump from Labour frontbenchers.
Opportunities amidst the challenge
While initial analyses painted a bleak picture, subsequent commentaries have offered a more balanced perspective, suggesting that the UK economy could, in certain respects, outperform its rivals. The Centre for Economics and Business Research (CEBR) highlighted that the proposed tariffs, while potentially reducing GDP by 0.9%, could also present strategic opportunities for the UK to pivot and innovate. For instance, the UK’s regulatory flexibility post-Brexit positions it uniquely to adapt to shifting global economic landscapes.
One potential area for growth lies in green technology and clean energy. Analysts have noted that if the US under Trump de-emphasises investment in these sectors, the UK could seize the opportunity to become a leader in these burgeoning industries. With government backing and international partnerships, British firms could establish themselves at the forefront of clean energy technology, attracting global investment and fostering economic resilience. This approach would also align with the UK’s broader commitment to achieving net-zero carbon emissions by 2050.
Another area of focus is strengthening economic and trade ties with the European Union. Research from the CITP revealed that nearly 50% of trade experts believe that improving relations with the EU should be a top priority – including here at Go Exporting. A closer partnership with the EU could offset some of the economic damage caused by US tariffs. Improved EU relations would facilitate smoother trade routes, reduce bureaucratic barriers, and offer access to one of the world’s largest markets. For sectors such as manufacturing, pharmaceuticals, and financial services, an EU-oriented strategy could prove crucial.
Furthermore, there are opportunities to recalibrate the UK’s trade strategy to target emerging markets in Asia and Africa. These regions are experiencing rapid economic growth and offer lucrative prospects for UK exporters. Diversifying trade partnerships could mitigate dependence on the US market and bolster long-term economic stability. Programs such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) could play a pivotal role in achieving this diversification.
Ultimately, while the Trump tariffs present a formidable challenge, they also serve as a wake-up call for UK policymakers and businesses to embrace innovation, diversification, and resilience. The emphasis should now shift to leveraging the UK’s unique position as a post-Brexit, globally connected economy capable of adapting to shifting geopolitical currents. Strategic investments in emerging industries and robust partnerships with new and existing allies may enable the UK to weather the storm and emerge stronger.
Whether or not Trump’s tariffs come into effect or not waits to be seen. If they do, there could be Brexit-level upheaval for many firms and entire sectors within the UK economy.
Let’s wait, watch, and see.
Go Exporting has received a certificate of appreciation from the Asian Exporters Chamber of Commerce and Industry (AECCI) following a successful engagement in their recent B2B forum.
The event was an online forum arranged by AECCI to connect Indian companies with relevant approved experts. Go Exporting was selected as the specialist consultant and approved partner for the UK.
Go Exporting CEO, Mike Wilson, was personally recognised for his support, cooperation and expert advice contributed to support the advancement of the Indian trade community.
AECCI commented that: “On behalf of the Asian Exporters’ Chamber of Commerce and Industry (AECCI), we sincerely thank you for participating in the AECCI Virtual B2B Event. Your presence and valuable contributions made a significant impact, and we are truly delighted to have partnered with you.
“The event was a great success, especially due to the engagement of delegates like you, which encouraged the feel of collaboration and desired outcomes.”
Mike met with seven companies looking for a variety of advice and services to expand their international business, including export readiness, customs and compliance, and finding distributors and international leads.
Learn more about the virtual B2B forum through the AECCI’s website and portal here.
This summer, Go Exporting CEO Mike Wilson joined Alibaba’s Eric Cross for a webinar examining the opportunities for US firms to trade in the EU.
The talk covered a broad range of topics including industry-specific opportunities, market statistics, administrative structure, key markets and culture and approach.
Watch the webinar in full below.
Find out more about exporting into the UK in this free guide where we cover everything from approvals and VAT to market research, customs and compliance, and effective marketing.
An increasing number of UK importers are creating their own internal checkpoints in a bid to overcome post-Brexit border delays as part of the Trusted Trader scheme.
The Financial Times and Fresh Produce Consortium are reporting that more and more plant and food traders have set up their own control points for product inspections, hoping to bypass government-run facilities which are facing delays – in particular the Sevington inspection site.
The trusted trader program, or Authorised Operator Status, was originally introduced to allow prolific importers to carry out their own produce checks as they’re already aware of the regulatory requirements and are, as the name suggests, trusted to give the go ahead.
Chief executive of the Fresh Produce Consortium, Nigel Jenney, told the FPC that: “The industry offered cost-effective solutions years ago but these were ignored by the previous government. They should have used the industry’s facilities and expertise that already existed and we would have readily shared it. Consequently, it’s a problem of their own making.
“Our solutions remain valid today and are a short and long-term solution for the flower, plant, fruit and vegetable sectors, as Sevington is simply not fit for purpose.
“The new Government needs to act now before SMEs fail, through no fault of their own.”
Becoming trusted traders
Businesses with a long history of customs compliance and have been through a thorough HMRC audit can be granted Authorised Operator Status, with numerous benefits including taking checks away from the border, reducing required documentary checks on goods, and essentially skipping the queues.
After delays and other issues such as IT problems at the Sevington border site, many firms are now looking to become trusted traders in their own right or partner with other firms who hold the accreditation.
But despite the recent post-Brexit interest in the scheme, UK firms still lag behind EU rivals.
Trade and customs specialist Andy Bridges told the Daily Update over the summer that: “We’re not even touching the EU countries on number of accredited firms, let alone the rest of the world.
“And it’s not just the EU – other countries, the US, Japan, even China – all over the world, other countries recognise this scheme.
“In essence, it’s giving you an enhanced degree of reputation and status worldwide.”
If your business is interested in ways to help streamline import processes and better manage new customs and compliance requirements, you can speak to the Go Exporting team today.
Go Exporting is delighted to have been named the Most Trusted Business Exporting Consultancy at this year’s UK Enterprise Awards.
The awards, hosted by SME News Magazine, recognise firms which demonstrate strong values and prioritise respect, innovation, excellence and tireless hard work.
Awards coordinator Laura O’Carroll commented that: “Hosting this year’s UK Enterprise Awards has been an excellent experience again, and I truly wish all of our winners all the best as they continue to elevate their spheres Congratulations on your success!”
Mike Wilson, CEO of Go Exporting said: “It’s always great to be recognised for the contribution you make to the wider business community. Through our educational partnerships with the likes of The British Library and Alibaba, as well as our long-standing track record of supporting businesses to successfully enter new international markets, this is another indicator that the work we’re doing is both valued and helping organizations to grow.”
On 15th August, Go Exporting CEO Mike Wilson will be teaming up with Alibaba to deliver a webinar guiding US SMBs on how to export to the EU.
The webinar will be co-hosted by Alibaba’s Eric Cross and will offer critical insight and strategies to help small firms successfully enter and thrive in key European markets.
This webinar will give attendees the do’s and don’ts, as well as the regulatory requirements, from a true industry specialist. Plus, there will be opportunities to ask your own specific questions at the end.
Sound good? Join Mike and Eric by signing up here.
We’ll see you then!
CEO of Go Exporting, Mike Wilson, has contributed 10 top tips to a global publication of 1001 business tips from 101 exporters and global trade advisors.
The publication, arranged by The Belmont Business Enterprise Centre Inc in Australia, will form part of an e-book to support sole traders and SMEs in expanding their exporting skills and knowledge, and how best to prepare for a national export development grant program.
The 10 contributions from Mike Wilson were:
- Define your objectives
- Prepare your export readiness action plan
- Discovering where to export
- Finding focus
- Choosing routes to market
- Assessing pricing and market entry viability
- Creating a bespoke international marketing plan
- Defining how to implement that plan
- Compiling a detailed export plan
- Reviewing and refining your approach