Proposed trade tariffs by former US president Donald Trump could strike Britain’s goods exports to the United States as hard as Brexit has hit UK sales to the European Union, according to new research.
Analysis from the Resolution Foundation warns that if Trump reintroduces universal tariffs between 10 and 20 per cent, Britain could face trade barriers on a par with the non-tariff hurdles imposed by the Trade and Co-operation Agreement with the EU.
The stark assessment suggests these prospective US import duties would largely target British goods, mirroring the effect Brexit has had on trade in manufactured products heading to Europe. In contrast, Britain’s services sector has continued to thrive. UK services exports have expanded at 7.5 per cent a year since 2019, outpacing the OECD average of 6.1 per cent, and services now comprise 54 per cent of total UK exports.
This divergence looks set to deepen. While the fallout from Brexit weighed most heavily on goods exports, service-oriented businesses have been comparatively insulated. Many have managed to dodge complex post-Brexit restrictions by setting up EU-based subsidiaries—an approach that safeguards their EU trade while, however, doing less to support domestic UK employment.
With the prospect of new US tariffs focused on goods, the gap between Britain’s goods and services trade is poised to widen further. The Resolution Foundation’s economists conclude that a generalised US tariff of 10-20 per cent could impose a shock on UK goods sales to the States similar in scale to that inflicted by Brexit on exports to Europe. The EU still accounts for nearly half of all UK goods exports, making the question of how to soften these blows increasingly urgent.
The think tank calls on the UK government to prioritise easing export barriers with Europe while simultaneously exploring strategies that sustain the remarkable growth in services sales overseas. UK service exports to markets such as Singapore, the United States, and India have surged since 2016, while top-performing sectors—including insurance, pensions, and “other business services” like legal advice and consulting—have even taken global market share from European and American competitors.
Emily Fry, senior economist at the Resolution Foundation, said: “The government should respond by doing what it can to avoid taking sides on tariffs, easing cross-channel trade for goods and taking a truly global approach to reducing barriers to the flow of services trade in and out of Britain.”
With Britain’s services sector proving relatively resilient, the policy priority now is to ensure that any new rounds of protectionism—on either side of the Atlantic—do not undermine the UK’s fragile goods sector or reverse its encouraging progress in selling high-value services to the rest of the world.
