The trade relationship between the United States and the United Kingdom remains one of the most economically significant bilateral partnerships in the world.
As of the four quarters ending Q3 2024, total trade in goods and services between the two nations reached an impressive £294.1 billion, despite experiencing a minor contraction of 2.3% (£6.8 billion) compared to the same period in 2023.
This marginal decline reflects a mix of global economic headwinds and shifting transatlantic trade dynamics.
The UK’s Most Strategic Trading Ally: The United States
The United States continues to be the United Kingdom’s largest single trading partner, accounting for 17.2% of the UK’s total trade portfolio. While this transatlantic trade includes a diverse mix of sectors—from automotive and pharmaceuticals to finance and consulting—services continue to dominate UK exports to the US, reflecting Britain’s status as a global services powerhouse.
In contrast, US imports from the UK are more evenly distributed between goods and services, although US data suggests a stronger American position in merchandise trade, sparking debate about who really holds the trade surplus.
Headline Trade Figures: A Snapshot of the US-UK Trade Balance
UK Data (ONS – Office for National Statistics):
- UK exports to the US: £182.6 billion (in the year to Q3 2024)
- Services portion: £124.4 billion (68.2% of total UK exports to the US)
- UK goods exports to the US: £58.1 billion
US Data (BEA – Bureau of Economic Analysis):
- Total US-UK goods trade in 2024: $148.0 billion
- US exports to UK: $79.9 billion (↑ 7.6% from 2023)
- US imports from UK: $68.0 billion
- US goods trade surplus: $11.9 billion (↑ 17.4%)
The Trade Surplus Debate: Who’s Really Ahead?
A curious paradox lies at the heart of the US-UK trade relationship: both countries claim to run a trade surplus with the other—a statistical contradiction that has taken on added significance as trade tensions simmer.
UK’s Perspective:
- Reported total trade surplus with the US in 2023: £71.4 billion
- The lion’s share of this surplus stems from the UK’s services exports, especially in finance, consulting, insurance, and digital services.
US Perspective:
- Reported total trade surplus with the UK in 2023: $14.5 billion (~£11.6 billion)
- The surplus, as per US figures, is driven predominantly by goods exports, particularly in aerospace, energy products, and machinery.
Understanding the Statistical Discrepancy
Why do both sides report conflicting trade surpluses?
- Different accounting methodologies: The US and UK use varying criteria for categorizing and valuing trade, including how goods are tracked and how services are estimated.
- Territorial scope: The US includes trade with Crown Dependencies such as Jersey, Guernsey, and the Isle of Man under “UK trade,” while the UK ONS excludes them.
- Services estimation: There’s a significant divergence in how each country tracks services trade—one of the hardest categories to measure accurately.
- US claims: It exported $4.8 billion more in services to the UK than it imported.
- UK claims: It exported £67.0 billion more in services to the US than it imported.
The gap in services alone explains much of the surplus contradiction.
Goods vs. Services: Breaking Down the Trade Balance
Goods Trade:
- UK (ONS): Reports a modest goods trade surplus of £1.9 billion with the US for the year to Q3 2024.
- US (BEA): Reports a much larger goods surplus of $9.7 billion in favor of the US for the same period.
Services Trade:
- UK’s reported services surplus: £67.0 billion in 2023
- Services exports make up nearly two-thirds of the UK’s total exports to the US, highlighting the UK’s strategic advantage in this area.
What the UK Exports to the United States: A Sectoral Overview
The UK exported £182.6 billion in goods and services to the US in the 12 months leading to Q3 2024. Here’s a closer look at the composition:
Top UK Goods Exports to the US: £58.1 Billion Total
| Export Category | Value (£) | % of Goods Exports | YoY Change |
|---|---|---|---|
| Cars (Automobiles) | £8.3B | 13.9% | ↑ 16.9% |
| Medicinal & Pharma Products | £7.2B | 12.0% | ↓ 15.7% |
| Mechanical Power Generators | £5.2B | 8.8% | ↑ 15.2% |
| Scientific Instruments | £2.4B | 4.1% | – |
| Aircraft and Aerospace Parts | £2.2B | 3.8% | – |
Observations:
- The strong rise in automobile exports underscores the UK’s rebound in manufacturing and its foothold in the US car market, especially for luxury and electric vehicles.
- Pharmaceuticals, though still a major export, saw a notable decline—potentially due to supply chain normalization after pandemic-driven surges.
UK Services Exports to the US: £124.4 Billion Total
Services are the crown jewel of UK exports to America, growing by 2.6% (£3.2 billion) year-over-year.
| Service Type | Value (£) | % of Service Exports | Notes |
|---|---|---|---|
| Other Business Services | £52.3B | 42.1% | Includes R&D, legal, PR, and consulting |
| Financial Services | £27.8B | 22.3% | ↑ 6.6% YoY |
| Insurance & Pension Services | £11.0B | 8.8% | – |
| Telecom, Computer, IT Services | £10.3B | 8.3% | – |
| Travel Services | £8.2B | 6.6% | Rebounding post-COVID |
Consulting and PR Services:
Within the “Other Business Services” category, management consulting and PR alone accounted for £22.9 billion—a figure that represents over 54% of the UK’s total exports in that sub-sector globally.
Looking Ahead: The Politics of Trade Surpluses
With former President Donald Trump once again at the center of US trade policy, potential tariffs loom over key UK exports. Trump’s administration has previously cited trade imbalances as justification for protectionist measures, making the perception of a trade deficit or surplus a politically charged issue.
Interestingly, British negotiators are strategically referencing US trade data—which shows America with a surplus—as part of their diplomatic toolkit. As one UK official quipped:
“Quoting America’s own numbers makes for a very friendly opening line in tough trade talks.”
What the UK Imports from the US: Leading Goods and Services
The trade flow from the United States to the United Kingdom remains a cornerstone of the transatlantic economic partnership. In the four quarters leading to the end of Q3 2024, the UK imported an estimated £111.5 billion in goods and services from the US. While this figure marked a year-on-year decline of 5.1% (£5.9 billion) compared to 2023, the US retained its position as a critical source of high-value imports for the UK.
Breakdown of US-to-UK Imports
The composition of these imports was nearly balanced, with goods making up 50.5% (£56.3 billion) and services representing 49.5% (£55.2 billion). This parity reflects the depth and diversity of the US economy — offering everything from energy resources and industrial machinery to financial, business, and technology-related services.
Top Goods Imported from the United States to the United Kingdom
UK imports of American-manufactured and extracted goods totaled £56.3 billion in the 12 months ending Q3 2024. This figure was down by 11.0% (£6.9 billion) from the previous year, indicating reduced demand in several high-value categories.
Key US Goods Imports into the UK:
- Crude Oil:
- Valued at £8.6 billion, crude oil was the UK’s top imported good from the US, despite a 6.4% annual decline.
- This continues the UK’s reliance on American energy post-Brexit, amid a push to diversify energy sources after phasing out Russian imports.
- Mechanical Power Generators:
- The second-largest import at £5.8 billion, this category includes turbines, engines, and related components essential for the UK’s manufacturing, aerospace, and energy sectors.
- The category experienced 7.1% year-on-year growth, reflecting increased industrial investment.
- Medicinal and Pharmaceutical Products:
- These imports surged 14.3% to £4.5 billion, underlining the UK’s dependence on American biotechnology and life sciences innovation.
- Refined Petroleum Products:
- Imports of refined oil products climbed 29.9% to £4.2 billion, driven by energy market fluctuations and UK infrastructure requirements.
- Aircraft and Aerospace Components:
- Although not in the top three, aircraft and aerospace imports remain significant due to defense and commercial aviation cooperation between Boeing and UK-based firms.
Combined Energy Imports (Crude + Refined Oil):
Together, oil-based imports from the US reached £12.8 billion, illustrating the UK’s ongoing reliance on the United States for energy security in a post-shale-boom world.
Primary Services Imported by the UK from the United States
On the services side, UK imports from the US reached £55.2 billion, rising 1.8% (£985 million) over the previous year. American expertise in business, financial, and intellectual services continues to find strong demand across UK industries.
Breakdown of Services Imported:
- Other Business Services:
- Valued at £27.2 billion, this broad category includes professional, scientific, and technical services such as legal advisory, consulting, engineering, and R&D.
- These services made up nearly half (49.1%) of the total US service imports and grew modestly by 0.7%.
- Travel Services:
- Reached £7.5 billion, increasing 12.4% due to a resurgence in UK-to-US travel post-COVID, especially for tourism, education, and business purposes.
- Financial Services:
- At £6.4 billion, this segment declined by 2.6%, suggesting a slight shift in UK firms sourcing some financial services locally or from the EU.
- Intellectual Property Use Fees:
- Totaled £4.9 billion, covering royalties for the use of patented technologies, software, trademarks, and copyrights in the UK.
- Telecommunications, Computer & Information Services:
- Valued at £3.5 billion, these services are essential to digital transformation and cloud computing adoption across UK businesses.
Intra-Company Transactions:
- Within “other business services,” intra-firm transactions were significant:
- Affiliated enterprise services totaled £9.2 billion, and intragroup cost recharges reached £6.4 billion, reflecting the deep integration between US multinationals and their UK subsidiaries.
UK-US Bilateral Trade: The Big Picture
The economic relationship between the UK and the US remains one of the most robust globally, despite recent dips in total trade.
Trade Value Overview (Q3 2024):
- Total UK-US Trade (Exports + Imports):
- £294.1 billion, down 2.3% (£6.8 billion) from the year before.
- UK Surplus with the US:
- The UK recorded a total trade surplus of £71.1 billion, a notable rise from £66.0 billion in the prior period, reflecting stronger performance in services.
Trade by Category: Goods vs. Services
| Trade Type | UK Exports to US | UK Imports from US | Balance |
|---|---|---|---|
| Goods | £58.1 billion | £56.3 billion | £1.9 billion surplus |
| Services | £124.4 billion | £55.2 billion | £69.2 billion surplus |
- Services continue to dominate UK exports to the US, accounting for 68.2% of total exports.
- Imports from the US are almost evenly split, showing the diverse nature of US economic output.
Regional Distribution of UK-US Trade
Trade volumes vary across the UK’s nations and regions, influenced by sectoral specialization and geographic factors.
Regional Export Leaders:
- West Midlands:
- Exported £7.3 billion in goods, largely from the automotive industry (Jaguar Land Rover and others).
- East and South East England:
- Exported £6.2 billion and £6.3 billion respectively, spanning pharmaceuticals, defense tech, and aerospace.
Regional Import Leaders:
- London & South East:
- Each imported £11.0 billion from the US, accounting for 19.3% of national imports apiece — primarily services, financials, and IP-related products.
- Northern Ireland:
- Registered the lowest volume with £1.5 billion in exports and £0.8 billion in imports.
Business Participation in Transatlantic Trade
Tens of thousands of UK businesses actively participate in trade with the United States:
- 40,100 UK businesses exported goods to the US in 2023.
- 45,000 UK businesses imported goods from the US.
- This represented:
- 32% of all UK companies engaged in global goods exports.
- 18% of UK businesses importing worldwide.
The wide participation underscores how deeply the US is embedded in the UK’s trade ecosystem — not just for major corporations, but for SMEs and mid-sized firms alike.
The Nature of US-UK Imports and Trade Relations
The UK’s import profile from the United States reveals a highly diversified and strategic economic relationship. From critical energy supplies and high-tech goods to professional and financial services, the US remains indispensable to the UK’s economic functioning. Although recent figures reflect a moderate contraction in trade volume, the enduring trade surplus and business engagement indicate that the transatlantic relationship remains strong — particularly in services, which continue to fuel UK export strength and drive growth across sectors.
As both nations navigate evolving global trade dynamics, including geopolitical shifts and tariff considerations, the data paints a picture of mutual dependency and opportunity that spans industries, regions, and enterprises.
An Uneasy Balance Between Friends
The US-UK trade relationship is robust, diversified, and mutually beneficial—but it’s also statistically complex and politically sensitive. While the UK claims a sizeable services-driven surplus, the US maintains that it exports more than it imports from the UK. These methodological differences in trade reporting make it hard to pinpoint who truly “wins” in this economic relationship.
What’s clear is that both nations benefit immensely—and resolving data discrepancies will be key to ensuring transparent, balanced, and sustainable trade in the years to come.
Potential Tariff Risks: Implications for UK-US Trade
Recent remarks from former President Donald Trump have stirred uncertainty regarding future trade dynamics between the United Kingdom and the United States. While his focus has largely remained on countries with significant trade imbalances with the U.S., the UK is actively working to position itself as a constructive partner in ongoing discussions.
Trump’s Recent Statements on UK Trade
Trump’s comments have directly referenced the UK, adding fuel to speculation:
- In a recent interview with the BBC, Trump remarked that “the UK is way out of line but I’m sure that one… I think that one can be worked out,” though he offered no specifics on the nature of the alleged issue.
- His administration has consistently voiced concern about trade deficits and has imposed punitive tariffs on countries like Mexico and Canada.
- He has also been critical of the European Union’s trade relationship with the U.S., saying: “They don’t take our cars, they don’t take our farm products, they take almost nothing and we take everything from them.”
While these comments have caused concern, they also suggest room for negotiation.
Scenarios and Risks for UK Exporters
If broad tariffs were applied to UK exports, the economic consequences could be significant:
- Based on 2023 figures, nearly £60 billion in UK goods exports to the U.S. could be affected.
- Key UK sectors vulnerable to potential tariffs include:
- Pharmaceuticals (£8.8 billion)
- Automobiles (£6.4 billion)
- Power generation equipment (£5.2 billion)
Tariffs of 10–20%—which Trump has floated for other nations—would increase costs for U.S. buyers and may lead to a decline in demand for UK goods. Some sectors may be hit harder than others, depending on their pricing flexibility and dependence on U.S. markets.
UK Government’s Strategic Response
UK officials are proactively responding to these tariff threats with a data-driven approach:
- Prime Minister Sir Keir Starmer and Lord Mandelson, the UK Ambassador to Washington, are pointing to U.S. trade statistics which show America had a $14.5 billion trade surplus with the UK in 2023.
- Since Trump’s tariff rhetoric is rooted in addressing trade deficits, the UK is highlighting that—according to U.S. data—the deficit does not exist.
- The UK is especially emphasizing that America enjoys a goods trade surplus with Britain, given that Trump appears less concerned with services trade.
Economists have warned that even if the UK escapes direct tariffs, it may still face indirect consequences. For example, U.S. tariffs on other countries could disrupt global supply chains or redirect foreign exports to the UK, increasing competition for domestic industries. According to the National Institute of Economic and Social Research, these knock-on effects could shave 0.1 percentage points off UK GDP growth in 2025.
US-UK Free Trade Agreement: Status and Outlook
While a full-scale free trade agreement (FTA) between the UK and the U.S. remains a long-standing ambition, progress has been slow and uneven—especially in light of changing political priorities.
Background and Previous Negotiations
The road to an FTA has been bumpy:
- Before Brexit, the UK participated in the EU’s Transatlantic Trade and Investment Partnership (TTIP) negotiations with the U.S., which collapsed in 2016.
- Following Brexit, both nations signaled interest in a bilateral trade deal, initiating formal talks during Trump’s first term.
- Several negotiation rounds took place in 2020 and 2021, but no comprehensive agreement was finalized before the change in U.S. leadership.
- The Biden administration has since deprioritized bilateral FTAs, focusing instead on digital and environmental trade partnerships.
Current Trade Arrangement and Sector Agreements
Currently, the UK and U.S. trade under non-preferential terms, which means goods and services are subject to standard WTO tariffs and other non-tariff barriers.
- While Britain has FTAs with over 70 countries, covering 64% of its global trade, the U.S.—its largest individual trading partner—is not among them.
- Both countries have instead pursued sector-specific agreements in areas such as technology, digital trade, and sustainability.
Outlook: What the Future May Hold
Several factors will shape the path forward:
- A potential return of Trump could revive interest in bilateral agreements—but with a more transactional, “America First” twist.
- The UK is likely to continue pressing the case that the U.S. enjoys a surplus in the bilateral trade relationship, making Britain an unlikely target for punitive tariffs.
- Any FTA talks would need to overcome thorny issues from previous rounds, such as:
- Food and agricultural standards
- Pharmaceutical pricing models
- Taxation of digital services
UK exporters have identified high-potential sectors for trade liberalization:
- Machinery and transport equipment (£27.2 billion in 2023 exports)
- Pharmaceuticals (£8.8 billion)
- Financial services (£28.6 billion)
While a comprehensive FTA remains aspirational, incremental deals targeting key sectors are the most likely outcome in the near term.
The Broader Picture: Future of UK-US Trade Relations
The UK and U.S. economic relationship is entering a transitional period. While the foundation remains strong, political developments on both sides of the Atlantic could affect the trajectory in meaningful ways.
Key Drivers of Future Trade Dynamics
- Tariff Implementation: Any U.S. tariffs introduced under Trump would immediately impact UK exporters. The UK hopes to avoid this by emphasizing the American surplus.
- Post-Brexit Trade Strategy: Britain is actively diversifying trade partnerships but aims to deepen ties with longstanding allies like the U.S.
- Sectoral Strength: The UK’s dominance in financial and professional services positions it well for future digital and service-based trade deals.
- Statistical Reconciliation: Ongoing efforts to align trade data between the ONS (UK) and BEA (U.S.) may influence how both governments perceive the trade balance going forward.
Opportunities vs. Challenges
There’s significant upside—if strategic barriers can be overcome:
Opportunities
- The UK exported £28.6 billion in financial services to the U.S. in 2023, nearly one-third of total UK financial services exports.
- Exports of telecom, computer, and information services to the U.S. rose by 7.2% to £10.3 billion in the year to Q3 2024.
- Sector-specific deals in technology, digital commerce, and sustainability are gaining traction.
Challenges
- Regulatory divergence in key sectors like pharmaceuticals, food safety, and digital privacy remains a hurdle.
- The global economic climate, including exchange rates, inflation trends, and monetary policy, could influence trade more than formal agreements in the short term.
Investment Ties: A Deeper Economic Bond
Trade is only part of the story—the investment relationship is just as significant:
- In 2023, UK companies had £494.1 billion invested in the U.S., accounting for over a quarter of total UK outbound FDI.
- Meanwhile, U.S. investors held £708.1 billion in UK assets, making up 34.1% of total UK inbound FDI.
This mutual investment underlines the strategic depth of the UK-US economic alliance.
Conclusion: Navigating a Complex Trade Landscape
While headline tensions around tariffs and trade balances create short-term volatility, the long-standing economic partnership between the U.S. and UK remains resilient. Both sides appear committed to maintaining open channels of communication, even as political pressures shape the agenda.
With targeted sectoral agreements likely in the near future and a full FTA remaining a distant—yet possible—goal, the focus will be on adaptability, negotiation, and shared economic interests in the years to come.