A slow journey – UK Trade Policy Stocktake September 2025

Publication of a first UK government trade strategy since Brexit was an important step in finally setting out a realistic view of the global economy and the UK’s place within that. Positive momentum was also provided by progress in trade relations with India, the US, and EU.

UK trade performance is, however, poor, with no growth in goods exports since 2019 allowing for inflation. Longstanding policy problems of excessive secrecy and the low priority given to implementation of agreements have not been tackled. Replacement of the previous ministerial team after just a year in office is unlikely to help.

There are headwinds beyond fragmenting global trade policy rules. Trade is no exception to this government’s general difficulty in shaping or telling an effective story about its purpose. Focus of trade deals, including with the EU, does not obviously match the UK economy. Department for Business and Trade civil service numbers are being cut.

Though there may be more deals, at this stage, trade policy seems unlikely to be a significant positive contributor for this government.

Deals should be seen as first steps

May 2025 was a month of UK trade policy announcements, a Free Trade Agreement with India, deal to lower some US tariffs raised by President Trump, and a common understanding with the EU. Each was positive in their own way, improving the relationship with the nearby bloc responsible for half of the UK’s trade, restricting damage to particular UK industrial sectors from US action, and tackling Indian protectionism.

None are, however, economically significant at this point due to limited scope and need for further steps. In the case of Trump, tariffs on UK goods entering the US are higher than in January, no deal is guaranteed to be honoured, and a 12.5% tariff-rate quota for cars and is little better than the EU’s quota-free 15%. Global Trade Alert does, however, show the UK doing comparatively well to other countries in trade-weighted terms, largely due to general pharmaceuticals and aircraft exemptions – these could, however change at any time.

With India, the FTA was a story of rather modest tariff reduction, including another car quota and little on non-tariff barriers. This was always likely to be the deal on offer, and the government deserves credit for not continuing to hold out for the unrealistic. Greater emphasis on future enhancement is thus needed in order to deliver meaningful benefits.

Agreement to negotiate with the EU, most notably by aligning food and drink regulations, was welcome but again limited. Little was done to make a public case in Brussels for a deeper economic partnership, and mobility remains a difficult defensive issue limiting the progress possible on services. At least alignment of the Emissions Trading Schemes to avoid the new burden of carbon border adjustment (CBAM) charges was positive, but the prospect of UK small companies losing de minimis benefits will be a blow. Talks to operationalise these commitments will be tough.

Negotiations to enhance existing preferential trade agreements with Switzerland and Türkiye could be maximised through a linkage to EU alignment, but this has yet to be mentioned by government. There was welcome discussion in June’s trade strategy for other forms of agreement, something first discussed internally in 2016, but this needs further work if these are to deliver economic benefits.

Overall, then, a story of rather tentative progress. This became even more provisional in September, when Secretary of State Jonathan Reynolds and Trade Minister Douglas Alexander moved to new roles, replaced by Peter Kyle and Chris Bryant respectively.

Lamentable reporting speaks to a continuing cultural problem

Five years on from a rush to ensure the UK replicates EU Free Trade Agreements ahead of Brexit, largely achieved, there has been no indication as to whether these deliver in any meaningful way. Unlike in the EU, there is no reporting, no targeting for improvement, no suggestion of linkage to export promotion, and not even acknowledgment of who leads engagement.

This symbolises a deep-rooted cultural problem in the UK government, which sees a severe risk in releasing any trade policy information, with the exception of unrealistic hyperbole about new deals. Stakeholders must sign non-disclosure agreements to be told very little about negotiating progress, and endless roundtables do not make up for this. There is no meaningful implementation section in the trade strategy.

Such an approach may be justified if there was evidence it delivers. There are strong grounds to believe the precise opposite. As was recognised years ago in the Blair administration, reporting and public attention are key drivers for improved public service delivery. One significant reason why the EU can consistently out-negotiate the UK is that their positions are widely tested, while those of the UK are reached in secret and thus often poorly considered.

There is a related issue of unscrutinised numbers suggesting greater trade agreement benefits than seem realistic, reducing the incentive to improve. As an example, the impact assessment for the India trade deal is exaggerated by the inclusion of reduced non-tariff barriers, which doesn’t reflect the actual text. Services trade export figures with the US can no longer be regarded as credible, given they are now double what the US claims to import. Weak Parliamentary scrutiny, as illustrated by a recent unfocused committee report on US trade, means poor practice is not challenged.

Officials want to do an effective job, there have been some tentative signs of better engagement, but until these long-outdated approaches are changed, there will be a limit to what can be achieved. Trade policy has to be a shared enterprise between government and stakeholders, at least when not involving a tariff-obsessed US President suddenly demanding bioethanol as the price of lowering tariffs.

UK trade policy objectives lack clarity

60% of UK exports are services. Their importance is recognised by the trade strategy, but not in agreements with India, the US, and EU. Discussion about services priorities typically goes little further than recognition of professional qualifications, even though this doesn’t currently seem like a major inhibitor to trade. Meanwhile, politicians across the UK openly call for reduced exports when it comes to universities.

To be fair, the UK is not alone in having a trade policy that barely reflects its economy. Bringing back manufacturing jobs has become a widespread political obsession, notwithstanding technology developments over 40 years that have delivered a transformed economy. Meanwhile, claims of attention to the needs of small business are as empty as their dedicated chapters of FTAs, and continuing the previous government’s freeports policy mostly means another vested interest lobbying unconvincingly for their own value.

There are positives. UK governments have consistently stated the importance of open trade, and not taking action against Chinese electric vehicles or removing de minimis customs provisions aligns with this. Changes to the Developing Country Trading Scheme have been well received, and there have been interesting moves on digitising trade. Struggles to define economic security are at least not being used as an excuse for protectionist actions.

The absence of an overall economic policy is a major constraint. Globalisation is dominated by large company trade and supply chains, relatively resilient to shocks but equally unresponsive to market opening they barely need. This makes trade policy unlikely to be transformative in a mature economy. Little of this appears to feature in overall UK thinking.

Trade policy, at best, would combine stability and openness with improving the incentives to invest in the UK for export purposes. This would inevitably require close interaction from a clear regulatory policy. While the trade strategy showed some leaning in this direction, there is little sense of putting trade in the context of an economic story building over the term of a government.

Rebuilding a global reputation

Previous UK governments talked of the UK as a free trade leader and WTO exemplar, neither of which reflected global opinion. This one has removed the language and moved closer to being a useful contributor by joining the appellate body replacement, the MPIA.

Initial criticism of the US deal for not being WTO-compliant, particularly from some in the EU, was predictably followed by their own deal being similarly problematic, an inevitability when dealing with a US President with little concern for any rules. UK political culture demands close ties with the US, and in trade terms, that is likely to be a problem for some time to come, given its bipartisan turn against openness. Leading plurilateral coalitions for openness is thus a less likely UK role than hoping to limit the most damaging thinking in Washington.

As unexpected as Prime Minister Starmer’s close ties with President Trump has been, the lack of pressure to do more about relations with China. So far, the UK government’s insistence that it doesn’t have to choose between partners has been accurate, even if there is a clear and realistic order of EU first, US second, China third.

Other countries generally see the UK as a willing but rather naïve trade policy player, with little thinking to offer on the future of trade, but a possible convenor of discussion. There are worse roles to have, but it is worth noting the contrast to defence, where the government has taken on European leadership. This may just reflect far deeper experience.

EU relations will be the most significant part of the next phase

Without strong targets in the trade strategy, independent scrutiny from a specific body, or a dedicated Parliamentary committee, most likely UK trade policy continues as before, completing a few new agreements without great economic contribution. Next in line is likely to be the Gulf Cooperation Council, a useful enough agreement if those countries can agree with each other, but one unlikely to significantly reduce market access barriers, not least given its limited role in services.

EU relations will be centre-stage, with every sign of government prioritising concluding agreements ahead of any particular content in good time for the next election. This runs the risk of repeating past errors in neglecting content, given there are unlikely to be public negotiating objectives, and many details that will make for difficult talks. In government’s favour is broad public support for closer ties, with red lines on customs union and single market probably helping. Broader regulatory alignment is the obvious future target to deliver greater benefit, and departments are starting to think about a wider agenda once this one is completed. This is the most positive story to tell regarding this government’s approach to trade.

For while improvement is evident, not least from a realistic world view, the overall picture is one of slight disappointment. Recent failure to deliver zero US tariffs on whisky, even during President Trump’s state visit, despite promises to the contrary, shows continued weakness in several ways. The UK’s trade policy journey continues to be one of rather slow development.