Global markets faced fresh volatility this week after U.S. President Donald Trump confirmed new tariffs on imports from Mexico, Canada, and China. While Trump paused a 25% tariff on Mexico and Canada for 30 days due to agreements on opioid control, China now faces 10% tariffs and has retaliated with its own 15% tariffs on American goods.
The European Union (EU) could also be targeted, with Trump stating that tariffs on the EU “will definitely happen” unless a trade deal is reached. However, he hinted that the UK might secure a trade agreement, as its trade with the U.S. is more balanced.
Trump remarked, “The UK is out of line, but I think that one can be worked out,” adding that he is “getting along very well” with the UK’s new Prime Minister Keir Starmer.
UK’s Trade Relationship with the US
According to official data, the U.S. is the UK’s largest trading partner, accounting for over 17% of total trade in the year to September 2024. The UK has a nearly balanced trade relationship with the U.S., meaning it could avoid being a major target in Trump’s tariff war.
UK Finance Minister Rachel Reeves reinforced this position, stating that Britain is “not part of the problem” in Trump’s efforts to reduce trade deficits.
Despite the UK’s struggling economy, some experts believe the UK could benefit from Trump’s tariffs, as businesses seek alternatives to tariff-hit suppliers in the EU and China.
How Trump’s Trade War Could Benefit the UK
Trade analysts suggest that even if Trump imposes tariffs on UK exports, the impact may be limited.
Professor Irina Surdu-Nardella from Warwick Business School told CNBC that because the UK economy is largely service-based, industries such as banking and consultancy will be shielded from tariff effects.
“In reality, the effects on the UK market would be relatively limited to industries like fishing and mining,” she explained. “The UK’s major exports to the U.S. include financial services, pharmaceuticals, and luxury goods, which are less affected by tariffs than manufacturing sectors.”
UK Could Become a Global Investment Hub
Some analysts believe that avoiding tariffs altogether could position the UK as an attractive destination for investment and trade.
Dr. Neri Karra Sillaman from Oxford University’s Said Business School suggested that if the UK remains tariff-free, it could become a key trading hub.
“With tariffs pushing businesses to find more cost-effective hubs, the UK could emerge as a preferred gateway for companies looking to bypass restrictions,” she said. “Industries such as luxury goods, pharmaceuticals, and advanced manufacturing could see increased investment and demand.”
Financial Markets See UK as a ‘Safe Haven’
Alex King, a former FX trader and founder of Generation Money, noted that the British pound has strengthened in response to Trump’s tariff announcements.
“If the UK avoids tariffs, it could become a safe haven for investors,” King explained. “During previous trade wars, companies rerouted goods through less-restricted countries—the UK could now see similar advantages.”
The pound has already gained against the euro, and analysts suggest that if tariffs on the EU escalate, investors could flood the UK market.
UK Market Poised for Growth in 2025
Financial experts predict that the UK economy could experience a boost in 2025, with interest rates likely to fall faster than in the U.S., encouraging investment.
Dan Boardman-Weston, CEO of BRI Wealth Management, believes that if Trump continues imposing tariffs on other economies, the UK could attract inward investment.
“If tariffs become a long-term feature of global trade, we’ll likely see more capital flowing into the UK, making it a stronger investment market,” he said.
Chris Metcalfe, Chief Investment Officer at IBOSS Asset Management, echoed this view, explaining that while foreign investors previously favored the EU over the UK, that dynamic is shifting.
“With political uncertainty in France and Germany, and Trump’s uncertain trade policies, the UK is becoming a more attractive destination for businesses and investment,” Metcalfe said.
UK’s Trade Future Amid Global Uncertainty
As Trump’s trade war reshapes global markets, the UK finds itself in a unique position. While European economies brace for tariffs, Britain could strengthen its trade relationship with the U.S. and attract new investment.
If the UK successfully negotiates a tariff-free agreement, it may become one of the few major economies with open access to both the U.S. and the EU, making it a key player in global trade for years to come.
