Britain faces a delicate balancing act as it works to maintain its crucial transatlantic partnership while reducing economic dependence on the United States. Fresh data reveals the extent of this challenge: the UK exported £182.6 billion to America in 2024, making the US Britain’s largest trading partner and accounting for 21.7% of all UK exports globally .
The economic relationship has never been more important. Total UK-US trade reached £294.1 billion in 2024, with the US representing 17.2% of all British trade. Digital services and technology represent expanding areas for both economies, with UK telecommunications, computer and information services exports to the US growing by 7.2% to reach £10.3 billion.
Security Imperatives Drive Policy Shift
No ads. No tracking.
We don’t run ads or share your data. If you value independent content and real privacy, support us by sharing.
Read More
Peter Mandelson, the British ambassador to the United States, recently outlined this strategic recalibration at the Atlantic Council’s Christopher J Makins Lecture. ‘The UK must become less dependent on America, while remaining inseparably linked,’ he said, addressing the need to balance economic autonomy with strategic partnership.
Mandelson stressed the importance of renewing the transatlantic alliance through military, economic and technological strength. He highlighted initiatives such as increased defence spending and collaboration on advanced technologies like artificial intelligence, calling for ‘a reboot of the relationship to meet the new global challenges’.
This rebalancing comes as Britain ramps up its defence commitments. The UK spent 2.3% of GDP on defence in 2024, above NATO’s 2% baseline, and Prime Minister Keir Starmer committed in February 2025 to increase spending to 2.5% of GDP by 2027 . The Strategic Defence Review, expected in the first half of 2025, will determine how Britain modernises its armed forces and sustains its ‘leading role in NATO’.
Trump’s Tariff Threat Forces Recalculation
The urgency of economic diversification has heightened under President Trump’s new trade policies. In April 2025, Trump imposed 10% tariffs on UK goods as part of broader protectionist measures. The automotive sector faces particular pressure, with a 25% tariff on cars and car parts affecting £9.0 billion worth of UK car exports to America – representing 27.4% of total UK car exports .
These measures have prompted Britain to consider retaliatory tariffs on US imports while simultaneously pursuing an economic prosperity deal with Washington. The House of Commons Library notes that international trade equivalent to 62% of GDP in 2024 makes Britain more vulnerable to global trade disruption than less open economies.
Despite tensions, both nations reached agreement on an Economic Prosperity Deal in May 2025, designed to deepen bilateral economic ties while enhancing market access for both sides.
Technology Cooperation Deepens Alliance
While reducing trade dependence, Britain simultaneously strengthens security ties through technological partnerships. The AUKUS trilateral agreement with Australia and the United States represents the most significant defence technology cooperation since the Manhattan Project, focusing on submarine technology, artificial intelligence, quantum computing and hypersonic missiles .
In August 2024, all three AUKUS partners lifted export controls and technology sharing restrictions, creating what officials describe as a ‘licence-free environment’ for defence cooperation. These exemptions remove licensing requirements for most military goods and technology exported between the three nations.
Britain’s commitment to NATO spending targets reinforces its strategic value. The UK is one of 23 out of 32 NATO members to meet the 2% GDP defence spending target in 2024, demonstrating burden-sharing credibility that Trump has demanded from European allies.
European Partnerships Provide Balance
Britain’s strategy includes strengthening European defence ties to reduce over-reliance on American capabilities. The UK signed its first bilateral defence pact with Germany in October 2024, focusing on NATO’s eastern flank operations and development of new long-range missile systems.
German submarine-hunter aircraft will operate from Scottish bases to patrol the North Atlantic, while both nations collaborate on weapons development including successors to the Storm Shadow missile system. The agreement follows similar defence cooperation deals between Britain, Germany and France, creating a foundation for broader European security coordination.
Exercise Steadfast Dart 25, conducted in January and February 2025, saw Britain provide the largest contribution with over 2,600 personnel and 730 vehicles deploying to NATO’s eastern flank. These exercises demonstrate Britain’s commitment to collective defence while building operational relationships beyond the traditional US partnership. This approach mirrors broader trends discussed in our analysis of NATO alliance restructuring.
Economic Diversification Strategy
The trade statistics reveal both the challenge and progress of reducing American dependence. While total UK-US trade declined 2.3% to £294.1 billion in 2024, this reflects broader economic headwinds rather than strategic diversification. Britain maintained a narrow £2.1 billion trade surplus with America in goods trade – the smallest surplus since 2001.
The UK’s largest goods export markets after America include Germany (£32.1 billion), the Netherlands (£28.1 billion), Ireland (£24.1 billion) and France (£23.2 billion). However, US exports at £58.7 billion remain almost double the next-largest market, highlighting the scale of economic restructuring required.
Services trade, where Britain enjoys competitive advantages, continues growing. UK services exports to America include financial services, telecommunications and computer services – sectors less vulnerable to tariff disputes affecting goods trade. This diversification strategy extends beyond transatlantic relations, as seen in recent developments like the UK-India trade partnership and efforts to strengthen cross-channel commerce with European partners.
Mandelson concluded that ‘the stakes are high but the opportunities for collaboration between the UK and US are greater than ever’. His vision represents a mature alliance adapting to multipolar realities while preserving essential security cooperation. Britain’s challenge lies in executing this rebalancing without undermining the partnership that remains central to its global influence, while avoiding the pitfalls that have hampered previous attempts at ‘Global Britain’ economic strategy.
