UK goods exports to US fell to 3-year low in June before trade deal

British goods exports to the United States fell to a three-year low of £3.9 billion in June, a 20% decline from the 2024 monthly average, primarily driven by the initial import tariffs imposed by U.S. President Donald Trump. This significant drop, which saw exports of all commodities decrease and followed a broader quarterly decline of over a quarter, underscores the immediate adverse impact of the tariffs on UK manufacturers, despite a new trade deal effective June 30 aimed at reducing some duties.

Analysis

According to official data from the Office for National Statistics, British goods exports to the United States experienced a sharp contraction in June, falling to £3.9 billion, their lowest level since February 2022. This figure represents a significant 20% decline from the 2024 monthly average and was primarily attributed to the initial impact of U.S. import tariffs. The downturn was broad-based, affecting all commodity categories, with machinery and transport equipment exports falling by £0.2 billion. The situation is further contextualized by a more than 25% drop in exports during the April-to-June quarter, which reflects a rush by manufacturers to ship goods before the tariff implementation in April. While a new trade deal came into force on June 30 to cut some duties, its potential benefits are uncertain as it leaves a 10% tariff on most exports and does not yet cover steel, indicating that UK exporters may face continued headwinds. In contrast, UK imports of U.S. goods rose by £0.2 billion, widening the trade imbalance for the month.

Key Decisions for Investors

• Investors should reassess exposure to UK-based industrial, automotive, and materials companies with high dependency on U.S. export revenues, given the demonstrated negative impact of tariffs on sales volumes.
• Monitor upcoming monthly trade data for July and Q3 to gauge the effectiveness of the new, partial trade agreement in mitigating the negative export trend, as the June figures pre-date its implementation.
• Consider the potential for sustained margin pressure on UK exporters to the U.S., as the persistence of a 10% tariff on most goods may force companies to either absorb costs or risk lower demand by increasing prices.