I know what you are thinking, that is a bit of a stretch?! But as the world watches Donald Trump’s return to the US presidency, you may think I am making a very tenuous link with the East of England.
But Trump has reignited fierce debates about the future of international trade. His new administration’s ‘tariff’ policies could significantly impact trade between the United States and the United Kingdom, particularly in regions like the East of England, an important export hub for the UK.
I have some personal experience in tariff negotiations from my time in Beijing, China.
While I firmly believe we should avoid a ‘tit-for-tat’ tariff war, which ultimately becomes a race to the bottom, I think it’s important to discuss both the potential opportunities and the possible pitfalls of a second Trump term.
Let’s be clear though Donald Trump will be massively disruptive to international trade
UK-US Trade Relations Under Trump
The United States is the United Kingdom’s second largest single trading partner, after the European Union.
According to the most recent trade figures the US accounted for 21.7% (£186.7 billion) of the UK’s total exports and 13.2% (£115.4 billion) of total imports.
The EU collectively represents a larger trading partner for the UK accounting for 41.4% (£356.3 billion) of the UK’s total exports and 51.5% (£450.9 billion) of total imports.
However, it’s very clear that the US is crucial when discussing the UK’s global trading relationships.
Trump’s trade policies could genuinely lead to renegotiations or new agreements, potentially altering tariff structures.
His earlier tenure was marked by a preference for bilateral (country to country) over multilateral (trading bloc) agreements, and the UK might seek to leverage this to establish a favourable free trade agreement (FTA), one of the long sort-after benefits of Brexit.
However, Trump’s protectionist stance could also result in new tariffs, especially if his administration perceives imbalances in trade or insufficient alignment with US priorities, such as national security and industrial strategy.
We are undoubtedly in for a turbulent few years.
The East of England: A Key Export Region
The East of England is home to several key industries that feature in the UK government’s “Invest 2035” industrial strategy.
This strategy focuses on eight high-growth sectors, including: advanced manufacturing, clean energy, creative industries, defence, digital technologies, financial services, life sciences, and professional business services. The East excels in these sectors and with some additional government support could absolutely benefit from strengthened UK-US trade ties.
For local businesses, particularly SMEs, the prospect of a new trade agreement could open up opportunities to expand into the US market.
The East of England has become one of the UK’s most successful export regions. While specific data detailing the East of England’s trade with the United States is not readily available, we can infer some insights from national statistics.
In 2023 the United Kingdom exported £60.4 billion of goods (15.3% of all goods exports) and £126.3 billion of services (27.0% of all services exports) to the United States.
It’s reasonable to estimate that a similar proportion of the East of England’s exports were destined for the US. According to the most recent regional data for both goods and services the East of England exported £28.6 billion in goods and £22.4 billion in services, totalling £51.1 billion in exports.
This would suggest that the region exported approximately £4.4 billion in goods and £6.0 billion in services to the United States in 2021.
Tariffs and Their Implications
President Donald Trump has expressed his admiration for tariffs, even stating, “To me, the most beautiful word in the dictionary is ‘tariff.’ It’s my favourite word”.
Trump’s administration has a track record of using tariffs as a negotiating tool. During his first term, tariffs were implemented on Chinese imports under Section 301 of the Trade Act, targeting intermediate goods like electronics and metals.
My view is that his focus will be on China, he will likely hike tariff rates against Chinese products both as a punishment for breaking the Phase One agreement and ‘peculiar invitation’ to negotiate.
China will dominate initial trade moves, but UK exporters should remain cautious. There will be additional geopolitical pressure added to the UK’s recent ‘reset’ with China.
If tariffs are extended to sectors involving the UK, they could disrupt regional and global supply chains and increase costs for businesses in the East of England.
For example, a key sector in the East is our Agriculture and Food Production industry: The East of England’s significant agricultural output could face challenges if Trump’s administration imposes tariffs to protect US farmers.
Why This Matters for Local Communities?
While much of the above seems to deal in ‘what ifs’ and whataboutery, you would be excused for asking; why should anyone in the East of England truly care? Isn’t this all just macroeconomics, far removed from the realities of local businesses?
The truth is the economic success of the East of England is heavily reliant on access to international markets.
Small and medium-sized enterprises (SMEs), which are the backbone of the region’s economy, are particularly vulnerable to shifts in trade policies. Increased tariffs could:
- Reduce Competitiveness: Increased costs might make the regions’ products less attractive in the US market, leading to reduced revenue and job losses.
- Disrupt Supply Chains: Tariffs on intermediate goods could raise production costs for manufacturers.
- Create Uncertainty: Businesses may delay investment decisions, affecting regional economic growth.
Is there any update? What are the Opportunities?
There will absolutely be winners and losers from Trump 2.0, advanced manufacturing and Pharma may face additional barriers while the service sector could see a boom!
Clearly tariffs pose challenges, they can also act as catalysts for innovation and diversification, encouraging businesses in the East of England to explore new markets and invest in advanced technologies to mitigate increased costs.
The UK needs to be bolder in our international trading ambitions! The UK’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) further enhances these opportunities, with over 99% of UK goods exports to CPTPP countries becoming eligible for zero tariffs, benefiting sectors such as manufacturing, food, and drink.
Additionally, sectors like clean energy, to which the East is a global leader, aligned with national and international priorities, including those emphasised by Trump’s national security policies, may discover new opportunities to collaborate with US firms and expand their global footprint through CPTPP‘s provisions for market access and investment facilitation.
The UK government is actively pushing a targeted UK-US trade agreement. The UK could align our key sectors, such as pharmaceuticals, advanced manufacturing, and energy, with US states like California for tech collaboration, Texas for energy, and the Midwest for manufacturing partnerships.
This said it looks likely that the UK and the US will be on divergent paths when it comes to green energy, with the new President committing to new gas and oil fields. Alternatively, matching UK regions, like the East of England’s agricultural strength, with states such as Iowa could unlock mutually beneficial trade synergies.
The UK is well placed to support industry partnerships with US agritech businesses. A clear opportunity could emerge from the UK’s recent Genomic Technologies (Precision Breeding) Act which will deliver a proportionate regulation for the fast-tracked development of new crops.
The use of data technologies such as generative AI to enhance farming is another example. There is much that we can offer in these areas of exciting technologies, driven by the many world-leading agricultural research organisations and companies based in the East of England.
As noted by Lord Harrington, areas of the UK are best placed to identify their own sectors of strength, but central government needs to take an active role in supporting and endorsing local differentiation.
Central government should do this by partnering with and promoting areas based on in-depth analysis of strengths and an understanding that not all sectors in all regions can attract central support.
This will involve challenging decisions about priority sectors in each local areas (invest 2035) now we just need to foster tailored economic growth.
Conclusion
The Trump administration is likely to introduce a mix of opportunities and challenges for the UK – US trade, with the East of England standing at the forefront of potential impacts.
While the prospect of increased tariffs raises concerns, it also underscores the importance of strategic planning for businesses and policymakers.
From Trump Tower to the forest in Thetford, the ripples of Donald Trump’s presidency could reshape the region’s economy.
ABOUT THE AUTHOR
Steven Lynch is executive director of Eastern Powerhouse. He describes it as “a business-led mission-based organisation, the Eastern Powerhouse welcomes the approach of an entrepreneurial mission-driven government.
“We aim to promote the huge untapped potential in the East of England to drive national growth. This could not be more aligned with Labour’s ambition to have the highest growth in the G7 by the end of the parliament.
Link to website:
https://www.easternpowerhouse.uk/
“Businesses in the East are desperate for a new sense of economic purpose at the heart of government and Labour’s core mission to kick start the economy is instrumental in achieving a more prosperous future for all communities in the region”.
