UK exports to the European Union partially rebounded in February after a record slump at the start of the year.
Figures from the Office for National Statistics (ONS) show that exports to the EU rose by £3.7bn, or 46.6%, having fallen by £5.7bn, or 42%, in January following the end of the Brexit transition period.
The change in trading regulations brought additional red tape and costs at a time when trade was already impacted by Covid-19 restrictions.
Imports from the EU showed a much weaker recovery, growing by £1.2bn or 7.3% in February after a record fall of £6.7bn (29.7%) in January.
Separate figures from the ONS revealed that the UK’s GDP grew by 0.4% in February. This followed a 2.2% decline in January – an improvement on the initial measure of 2.9% contraction.
“The economy showed some improvement in February after the large falls seen at the start of the year but remains around 8% below its pre-pandemic level,” the ONS said.
“Exports to the EU recovered significantly from their January fall, though still remain below 2020 levels.
“However, imports from the EU are yet to significantly rebound, with a number of issues hampering trade.”
The European Union has announced a range of tariffs to be levied against US exports, according to BBC News.
The move is in retaliation to US tariffs on steel and aluminium revealed earlier in June. The EU tariffs target US products such as blue jeans, motorbikes and bourbon whiskey. Trade Commissioner Cecilia Malmstrom acknowledged that the EU “did not want to be in this position.”
The tariffs, which also target cranberries, orange juice, sweetcorn and peanut butter, responds to the 25% tariffs on steel and 10% on aluminium. President Trump has justified the tariffs on security grounds.
South Korea, Australia, Argentina and Brazil have agreed to impose voluntary limits on exports to the US while Canada has unveiled its own retaliatory measures. Mexico has also imposed tariffs on American products such as steel, pork and bourbon.
The EU tariffs will impact around €2.8bn of US goods, whereas the US tariffs impact €6.4bn of EU exports. The EU tariffs will be cancelled if the US tariffs are removed.
The EU selected products to have the greatest political impact. Bourbon whiskey is a prime product of Kentucky, the state of Senate majority leader Mitch McConnell. Orange juice is important for Florida, a key swing state.
IMF director Christine Lagarde said a trade war would result in “losers on both sides” and could have a “serious” impact.