UK trade deal boosts exports to US amid tariff changes

In May 2020, the United Kingdom reported a notable increase in exports to the United States following the announcement of a trade deal between the two nations. This deal, which took effect after May 8, aimed to alleviate some negative impacts stemming from the higher tariffs previously imposed by the administration of former President Donald Trump. Specifically, the agreement included a reduction in tariffs on UK automotive exports and eliminated tariffs on UK steel, aluminum, and components from the aerospace industry, such as aircraft parts and engines. The British Office for National Statistics recorded a significant uptick in goods exports worth £300 million for May, indicating a recovery after a substantial decline of £2 billion in April, which marked the most significant monthly decrease in exports since records began in 1997. While the increase in exports was welcomed, it was noted that the overall volume of goods exported remained relatively low during this period. The rise in exports was largely attributed to an upswing in shipments of chemicals. It's important to note that while the trade deal brought positive changes for certain sectors, a blanket tariff of 10% on a wide range of other goods remained in place as a result of the prior tariff structure introduced by Trump during what he referred to as “liberation day.” The ramifications of the growing trade tensions and tariff impositions from the past continued to cast a shadow over the trade relationships, creating uncertainty among various industries. While the overall export figures showed improvement, imports of goods from the US to the UK experienced a decline of £900 million in May due to decreased purchases of gas, crude oil, ships, and aircraft. Looking at the broader picture, the overall value of exports from the UK did increase by 2.2% in May, equivalent to £600 million, with positive movements both to EU and non-EU countries. Nevertheless, this was juxtaposed with a widening trade deficit, which grew by £6.7 billion to £13.2 billion over the three months leading up to May 2020, primarily due to a surge in goods imports and a drop in goods exports. The increasing trade deficit highlighted ongoing imbalances in international trade for the UK, reflecting various challenges in negotiating favorable terms in the evolving global economy.