UK goods exports delivered a strong start to 2026, rising by £2bn in January, but early warning signs suggest the momentum may not be sustained as global trade conditions tighten.
The latest trade data shows exports increased by 6.7% month on month, with growth across both EU and non EU markets. Shipments to non EU countries rose by £1.1bn, while exports to the EU increased by £0.9bn, pointing to broad based demand at the start of the year.
However, this positive headline masks a significant weakness in one of the UK’s key trading partners. Exports to the United States fell by £0.5bn, a decline of more than 11%, continuing a downward trend that has been evident since tariffs were introduced in 2025.
The detail behind the figures highlights that machinery and transport equipment, alongside fuels and chemicals, were the main drivers of January’s growth. Non EU gains were led by chemicals and machinery, while EU demand was supported by machinery and fuel exports.
Looking at the wider trend, exports also increased over the three months to January, rising by £1.8bn compared with the previous period. Both EU and non EU markets contributed to this growth, suggesting a degree of underlying resilience in UK trade.
At the same time, imports declined. Goods imports fell by £0.3bn in January and were down by £1.3bn over the three month period, largely driven by reduced demand for non EU goods.
This combination of rising exports and falling imports helped narrow the UK’s trade in goods deficit by £3.1bn to £56.6bn over the three months to January, offering some improvement in the overall trade balance.
Despite this, the outlook for the remainder of 2026 is far less certain.
The continued decline in exports to the US is a major concern, particularly for manufacturers. Reduced demand for UK produced vehicles has been a key factor behind the fall, and further pressure is expected following the introduction of a 10% baseline tariff on goods entering the US.
This move has effectively removed any pricing advantage UK exporters previously held over competitors from higher tariff countries, placing British goods on a more level but more competitive footing.
At the same time, wider global conditions are becoming more challenging. Rising energy costs linked to geopolitical tensions, including instability involving Iran, are expected to feed through into higher production and transport costs.
There are also signs of a broader shift in trade policy, with governments increasingly turning towards protectionist measures to support domestic industries. This changing landscape is likely to add further friction to international trade flows.
Taken together, these factors suggest January’s strong export performance may represent a short term uplift rather than the start of a sustained recovery.
UK exporters are entering a period where volatility is likely to define trading conditions, with success increasingly dependent on market diversification, cost control and the ability to respond quickly to shifting global pressures.