The international delivery expert Parcelhero says the new US-UK trade deal – announced on 8 May and finally signed off by President Trump and PM Keir Starmer at the G7 meeting on Monday – has been eagerly anticipated.
However, it cautions the agreement may be too little, too late to help many British SME-sized exporters.
April’s trade figures from the Government’s Office for National Statistics (ONS) have revealed just how bad the impact of President Trump’s ‘Liberation Day’ tariffs (announced on 2 April) were for UK exports to America.
Britain’s exports to the US tumbled by £2bn compared to March. That’s a fall of 33% and the largest monthly decrease since records began back in January 1997.
UK exports to the US have now fallen to their lowest level since February 2022. Nor was there better news elsewhere, with UK exports to the EU also falling by £0.6 billion (4.3%) during April.
Parcelhero’s Head of Consumer Research, David Jinks M.I.L.T., says: ‘Whichever way you look at it, these disastrous export figures show why the UK urgently needed at least part of its US trade pact signed off as soon as possible. Overall, Britain’s global exports tumbled by £2.7 billion (8.8%) in April, with falls in exports to the US, EU and non-EU countries.
‘However, Monday’s deal to reduce tariffs on cars and exempt aerospace products won’t help the many British manufacturers and retailers who sell other types of products to the US and have been hit hard by the new Trump tariffs. The US is Britain’s largest single overseas market and last year around 39,500 UK VAT-registered businesses exported goods there. The majority of these companies won’t see any benefit from the new deal.
‘That’s because the new 10% blanket tariff on UK goods announced on 2 April remains on the majority of goods valued at over the USA’s $800 (around £600) de minimis limit. That applies to a multitude of items, from high-end clothing to ceramics. To give an idea, last year the UK exported $138.87m of apparel (including knitted and crocheted clothing), $109.37m of ceramics and $256.75m of toys, games and sports equipment to the US. All such products with a value of over $800 still face Trump’s new 10% tariff.
‘Let’s not forget that Trump has pledged to get rid of the $800 de minimis threshold for all countries, not just China. It’s now a question of when, not if, that happens. That will expose many hard-pressed UK exporters of lower-value products to the new 10% basic tariff for the first time.
‘All of this means that Trump and Starmer’s Economic Prosperity Deal may not be worth the paper it’s written on for many UK exporters. The rather chaotic signing event saw Trump drop the agreement, PM Starmer scrabble to pick the papers up – presumably before Trump changed his mind – followed by Trump mistakenly announcing to the press he had reached this trade agreement “with the European Union”. It was an ill-starred start to the new trading relationship.
‘What is really needed is a comprehensive Free Trade Agreement with the USA that would eliminate tariffs and speed up the processing of UK goods at US borders. Such a deal was hailed as one of the supposed chief benefits of Brexit. Back in 2019, then-PM Boris Johnson claimed Brexit meant that the UK would be “first in line to do a great free trade deal” with the US. In the event, that never happened and this new Economic Prosperity Deal falls far short of the free trade dream.
‘Of course, whatever the outcome of the still-ongoing trade negotiations (there’s been no announcement yet about UK steel exports) we are inevitably looking at a period of volatility and changes to US shipments.’
