Chancellor Rachel Reeves is intensifying efforts to secure a trade agreement with the United States following the release of official data indicating that the US was the UK’s leading market for goods exports in the previous year.
According to a report from the Office for National Statistics, the US purchased nearly £60 billion worth of British-manufactured goods in 2024, representing more than 16% of total UK exports. Concurrently, the UK imported goods valued at just over £57 billion from the US during the same period.
The significance of the trade relationship between the two nations was underscored by these statistics, which were made public shortly before Rachel Reeves’ scheduled meeting with US Treasury Secretary Scott Bessent in Washington. Reeves emphasized that the government was diligently working to finalize a trade deal with the US.
Currently, the UK faces tariffs of 10% on most goods exported to the US, with higher tariffs of 25% imposed on British-made cars and steel products. The data from the ONS revealed that the UK exported £9 billion worth of cars to the US in the previous year, accounting for 27.4% of all vehicle exports. This made the US the primary market for UK car exports, surpassing China by a significant margin. Concerns have been raised about the potential loss of over 25,000 jobs in the UK’s automotive industry if these tariffs persist.
“Machinery and transport equipment” emerged as the leading category of goods exported from the UK to the US in 2024, comprising nearly half of all shipments and amounting to £29.1 billion in sales. Within this category, products such as turbines and car engines contributed £4.6 billion to the total.
Chemicals, including pharmaceuticals, constituted the second-largest export category, with sales totaling £10.8 billion, with the US accounting for nearly 20% of all British exports in this sector. Despite the notable 25% tariffs on steel imports, the UK exported approximately £400 million worth of iron and steel products to the US last year, positioning America as the fourth-largest export market for these commodities.
While the US represents the UK’s primary destination for exports to a single country, the European Union holds a larger share as a trading bloc.
Furthermore, the ONS data highlighted that trade in services between the UK and the US far exceeds the trade in goods, with financial services, consulting, and public relations being key components. In 2024, the UK imported services valued at £61.2 billion from the US, while exporting services worth £137 billion.
Lindsay James, an investment strategist at Quilter, emphasized the crucial insights provided by the trading data and stressed the importance of navigating trade negotiations effectively to safeguard economic interests and industries driving prosperity.
Rachel Reeves is anticipated to engage in discussions regarding a potential UK-US trade agreement during her meeting with Mr. Bessent, following discussions with other finance ministers at the International Monetary Fund’s spring meetings. Reeves acknowledged the challenges posed by tariffs and expressed an understanding of President Trump’s objectives in addressing global trade imbalances.
While prospects for a UK-US trade deal remain uncertain due to differing priorities, potential concessions, and tariff negotiations, Reeves has not ruled out the possibility of tariff adjustments on cars as part of a reciprocal agreement. The Chancellor’s advocacy for free trade was evident during her participation at the IMF, where she advocated for reducing both tariff and non-tariff trade barriers.
Despite ongoing discussions with the US, Reeves emphasized the paramount importance of UK-EU relations, particularly in the post-Brexit era. Efforts to align rules with the EU to minimize trade barriers are underway, with an upcoming summit in May aimed at resetting relations.
In 2024, the UK’s goods exports to the EU exceeded those to the US, amounting to £174.4 billion, representing almost half of all overseas product sales. Additionally, the UK imported goods valued at £314.2 billion from the EU during the same year.