U.S. drops from top 3 markets for UK exports

Industry association Make UK, which represents 20,000 UK producers, said on Monday that its latest survey of British manufacturers found US tariffs and the trade wars they have unleashed have dented producers' confidence to the point that they now put the Asia-Pacific, the European Union, and the Middle East ahead of the US, which is in fourth place.

It is the first time the US has been outside the top three since Make UK started its quarterly survey in 1988.

Seamus Nevin, Make UK's chief economist, told The Telegraph newspaper: "There has clearly been an immediate and striking shock to the system, as far as the special trading relationship with the US is concerned for manufacturers.

"It remains to be seen whether this is a one-off drop in sentiment while trading relations enjoy a reset or whether this is the first sign of a permanent fracture in relations with manufacturers' biggest market."

Trump has made no secret of hoping his tariffs will prompt factory owners to relocate their operations to the US, but Nevin said the survey shows that only 4 percent of UK producers are considering setting up a factory there.

The survey was conducted after UK Prime Minister Keir Starmer agreed a trade deal with Trump last month that ensures the nation is less heavily impacted by tariffs than many other nations.

However, Nevin said: "Even when the trade deal comes into force, UK goods will now be more expensive and, moving forward, companies may just decide that it's now easier to turn their gaze toward markets elsewhere, where there are fewer barriers to doing business."

Record decline

The survey was published after the Office for National Statistics announced last week that the value of UK exports to the US had fallen by 2 billion pounds ($2.7 billion) in April, marking the largest monthly contraction on record.

The Make UK survey suggests that British manufacturers do not expect things to improve in the short term, with around two-thirds saying they expect their export volumes to continue to decline. And around a third are considering revamping their supply chains to mitigate tariff issues, the survey found.

Make UK's survey, which was conducted in partnership with the accountancy company BDO, found that 60 percent of UK manufacturers believe the tariffs will harm their businesses.

Make UK added that the tariffs, in conjunction with high energy costs and rising inflation in the UK, are pushing the nation toward "deindustrialization".