Navigating the Shifting Currents of Global Trade: What’s Next for the UK and Beyond?
International trade remains key to the growth and success of most nations and economies, even in a world where the pathway to trade appears to be more difficult, or fraught with challenges.
Since even before the 2nd April Liberation Day tariff announcements there has been greater volatility in trade flows. A forward buying of goods by US businesses ahead of the expected tariff implement meant export trade volumes from the UK, Euro Area and other major suppliers increased sharply, supporting an improvement in trade balances. The narrowing in the UK trade deficits in Q4, and the first month of Q1, has then given way to a worsening in trade balances in Q3, and that in spite of agreed general terms for a UK-US trade deal being signed in May.
Uncertainty over trade between the US and the Rest of the World has opened up opportunities between those countries. Will these mean more prosperous deals between the UK and Canada, or India, or other Asian and Australasian countries? Could that introduce additional complexities into FX hedging of trade as the USD is circumvented for local currencies instead?
What could this potential new world order mean for trade? Will exporters have to take a larger share of tariffs in order to protect key consumer markets? Will trade flows start to drift away from the US as it becomes harder to deal with and more inward looking? Could the UK’s membership of the CPTPP start to pay off in terms of expanded trade flows, or could the UK look to re-examine further its relationship with its biggest trading partner, the European Union?
Equally, what sectors will perform well or badly in the wake of all this disruption, what will the impact be on global growth, and how will this affect shipping/freight and domestic manufacturing activity? The heritage of the North-East is deeply rooted in coal mining, engineering, shipbuilding, and trade. Now it has a focus on renewables, petrochemicals, and the automotive industry and supply chain. The region remains a positive contributor to net trade with a higher value of exports versus imports.
Moneycorp has a strong and growing relationship with the North East Chamber of Commerce and businesses in the region, offering international payments and FX solutions across a broad array of currencies and economies. Find out more about the offer here.
You can also download Moneycorp’s November FX Forecast here.
