Trump threatens tariffs, risking UK trade relations

In early February 2025, the ongoing trade tensions between the United States and both the UK and the European Union became more pronounced as President Donald Trump issued threats of imposing tariffs. The UK is highly dependent on the US market, which is its largest single trading partner, particularly in services. However, the UK imports more goods from Germany than from the US. Given the UK's trade surplus with the US, where exports outpace imports, the threat of tariffs could undermine this balance and affect key UK exports. Notably, the UK's automotive sector, which exported £8.3 billion worth of cars to the US in the past year, could face significant challenges. Other affected sectors include scientific instruments and food exports, particularly Scottish Salmon, which constitutes a large proportion of the UK’s food exports to the US. The current economic situation is precarious, with an ongoing struggle for growth reflected in the recent decisions made by the Bank of England to cut interest rates. Experts warn that while a trade conflict might benefit the US in the short term, the long-term consequences could produce reciprocal trade barriers that stifle growth on both sides of the Atlantic. As discussions surrounding trade relationships intensify, UK Prime Minister Sir Keir Starmer has emphasized the need for the UK to maintain strong relations with both the US and the EU without having to choose between them. The implications of Trump's tariff threats are underscored by the underlying complexities of the UK's trade dynamics, especially given its reliance on both imports and exports across different economic sectors.