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.
The new EU General Product Safety Regulation (GPSR) became fully enforceable on December 13, 2024. It establishes broad safety standards and procedures that apply to a wide range of non-food consumer goods.
Are you ready for the new regulations?
The GPSR’s key objectives include:
- Ensuring consistent safety across products in the EU
- Addressing risks linked to technology (e.g. cybersecurity vulnerabilities)
- Establishing stringent requirements for labelling, traceability, and risk assessment.
Manufacturers and importers must ensure that each product meets comprehensive safety and traceability standards. This includes adding serial or batch numbers to facilitate tracking and including detailed labelling with safety instructions.
Technical documentation that includes a safety assessment, which considers physical, mechanical, and potentially chemical risks, is required and must be kept for at least ten years.
Manufacturers outside the EU must appoint an EU-based representative who is responsible for product compliance and accessible for regulatory communication
The regulation also mandates accessible and comprehensive customer support for reporting safety issues and a structured recall process for defective parts.
Overall, the GPSR aims to unify product safety standards across EU member states, making it essential for businesses to align their practices with these requirements to avoid penalties.
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.
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.
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
Interested in expanding your business into new Scandinavian markets? Then you’re in luck!
Earlier this month, Go Exporting CEO Mike Wilson joined Business Wales for a webinar advising delegates as to the export opportunities in Denmark and Sweden.
The webinar included details on market statistics, administrative structure, key sectors and opportunities, business culture and post-Brexit dynamics.
Watch the webinar in full below.
Looking to expand internationally but aren’t sure where to start, or lack the internal resources to drive international growth? Go Exporting specialises in helping firms like yours to open a world of opportunities.
Learn more about our international trade consultancy services here.
The next government needs to deliver a better trading relationship with the EU as a matter of priority.
That’s the view of the British Chambers of Commerce, one of the most influential business networks, set out as part of its Future of the Economy Manifesto for 2024.
The manifesto focuses on five key areas of the UK economy, from green innovation and digital, to people, work, and global Britain.
The manifesto notes that: “There is a clear need to improve trading relationships with the EU, which remains our biggest trading partner.
“Retaining Britain’s place on the global stage also means keeping our most successful businesses who may be looking overseas for finance. British growth capital should be made more accessible.
“Finally, the government should only diverge from EU rules where it adds value to UK plc. We encourage close alignment on regulations that impact Britain’s global trade, such as standards on manufactured goods, while supporting divergence where there is a clear benefit, such as the Mansion House reforms that will help unlock additional investment for UK firms.”
The manifesto put forward three key recommendations for growing global trade;
- Implement trade deals which improve export potential for business
- Grow foreign direct investment into the UK
- Continue reforms to increase UK investment
A Swiss solution?
William Bain, BCC Head of Trade Policy, said that the UK should be looking towards a Swiss-style deal with the EU after a recent trip to the country.
He said that: “Switzerland is one of the UK’s strongest trading partners with a depth to its finance and services trade that mirrors our own. It is also at the heart of Europe’s life sciences and pharmaceutical industries.
“As a member of the European Free Trade Area, while sitting outside the European Economic Area, it can set its own course on many regulatory issues.
“But it retains close links with the EU Single Market, particularly in goods. These have been developed through bilateral agreements with Brussels over the past half a century, though Switzerland is also a full participant in the Schengen Zone, allowing friction-free movement through Swiss territory for qualifying citizens.”
Grow through the growing pains with Go Exporting
If Brexit has hampered international trade growth, or put the brakes on your export plans altogether, then we can help.
Go Exporting are the industry experts in helping firms to open a world of opportunities abroad, from identifying potentially profitable markets, to putting in place the export strategy and distributors to get you there.
Interested? Learn more about our international trade consultancy here.
UK exporters are being urged to transition to the Customs Declaration Service (CDS) before the 4th of June deadline to ensure the continued smooth processing of their export declarations. With less than a month remaining, HMRC has intensified calls for businesses to make the switch from the current Customs Handling of Import and Export Freight (CHIEF) system to the new CDS.
Why the change?
The transition to the CDS is part of the government’s ongoing efforts to modernise and streamline customs processes. The new system promises enhanced capabilities, including improved data integration and greater flexibility in managing customs procedures. The CHIEF system, which has been in operation for decades, will be completely phased out, marking a significant shift in how export declarations are handled.
Sarah Hartley, HMRC’s Director of Border Change Delivery, said: ”There are just weeks left for businesses to migrate their export declarations to CDS – those who have yet to move need to do so now.
“Anyone who needs help migrating to CDS should work with a customs agent who is ready to use the system and can make declarations on their behalf.”
Support and resources available
To assist businesses in this transition, HMRC has provided a variety of resources, including a CDS toolkit and checklists. Exporters are encouraged to utilise these tools to ensure they are fully prepared for the switch.
Businesses that fail to adopt the CDS by the deadline may face significant disruptions to their export operations.
Steps to transition
Exporters should start by familiarising themselves with the CDS and its requirements. Key steps include:
- Registering for the CDS: Businesses need to sign up for the service through the Government Gateway.
- Understanding the new data requirements: The CDS requires more detailed information than CHIEF, so exporters should review the new data fields and ensure they have the necessary information ready.
- Updating software: If businesses use customs declaration software, they must ensure it is compatible with the CDS. HMRC provides a list of approved software providers.
- Training staff: Employees who handle customs declarations will need to be trained on the new system to ensure a smooth transition.
Exporters keen to understand the main differences between the two systems can do so with this gov article.
