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What might a Trump presidency mean for the UK’s creative industries?

As the UK’s creative industries are an increasingly international part of the UK economy, Bernard Hay of the Creative Policy and Evidence Centre considers what effect the new US administration might have on creative exports.

Bernard Hay
6 min read

It is no surprise that the UK government has identified the creative industries as a priority growth sector in their forthcoming Industrial Strategy and Trade Strategy, which aim to foster free and open trade with key partners and expand markets for growth sectors.

However, the international nature of our sector also means it can be affected by geopolitical shifts, as we have seen in recent years with the pandemic and Brexit. 

This week sees a further significant shift in one of the UK’s main trading partners in this sector – the United States of America – with the inauguration of Donald Trump to his second presidential term.

While the trade policies he will enact during his presidency are unknown, it’s clear he will adopt a protectionist approach, with tariffs applied to some countries at least.

Creative goods and services

What then might a Trump administration mean for the UK’s creative industries trade with the USA? How might it affect our exports there, and what might be the risks and opportunities?

It’s worth highlighting a few points about our creative exports, which comprise both creative goods (such as books and pottery) and creative services (such as producing architectural designs for a new building).

The Creative Industries Policy and Evidence Centre’s report – UK Trade in a Global Creative Economy – shows that creative service exports account for the vast majority of our creative exports and have grown in importance to the UK’s booming services trade. In 2021 we exported £45.6bn in creative services, accounting for 14% of all UK service exports, up from 8% in 2010.

In contrast, growth in creative goods has been uneven over the last decade, and experienced declines in 2016 and 2020. It now only accounts for 3% of all UK goods exports. Interestingly, Europe remains by far the largest export destination for creative goods and accounts for a far greater share than the USA, despite our departure from the EU (44% to Europe vs 25% to the USA).

Why tariffs matter

This divergence between goods and services is important, not least because goods trade has been the focus of Trump’s statements on tariffs. At one point, he declared the USA would implement a universal tariff of 10-20% on all goods coming into the country.

Although tariffs on UK goods would likely have less effect on creative exports overall, they would affect some parts of the creative industries more than others.

For example, our Music, Performing and Visual Arts sub-sector is responsible for almost one third of all UK creative goods exports and rely heavily on the USA as an export destination. Goods exports from our Museums, Libraries and Galleries and Publishing sub-sectors also see a large share of their goods exports going to the USA.

Should goods tariffs come to the negotiating table, UK policymakers will need to consider how they might affect different sub-sectors if they are to protect creative goods exports to the USA.

For instance, in his last term, Trump considered cutting funding to the US government’s National Endowment for the Arts. While only a small fraction of the country’s overall arts funding, this type of domestic change could influence the distribution of UK creative work in the USA.

Opportunities for future trade growth

But what about creative services, which are more affected by non-tariff trade measures? It is here that opportunities for future creative trade with the USA might lie.

The USA has grown in importance as a destination for creative service exports following the Brexit referendum. In 2016 it accounted for only 22% of all UK creative service exports, but by 2021 this had risen to 37%. It is a particularly important destination for high-growth parts of the creative industries, including those related to ICT, screen industries, and advertising and marketing. The USA is also the largest destination (by country) of UK outward foreign direct investment in the creative industries, which bring benefits including market access to the USA for UK firms.

Addressing service trade frictions – which span areas from regulation to labour mobility – will be important, and there is uncertainty about how Trump will approach the full spectrum of non-tariff trade measures. One area of current debate is around potential visa reforms (which were also a focus of Trump’s previous administration), including changes to the high-skilled worker H-1B visa.

While it is hard to estimate the full impact these changes might have, they are but one example of new restrictions that could shape UK-US trade in the months ahead.

Two-way relationship

The extensive two-way relationship between the UK and USA’s creative industries mean the UK government should prioritise the sector in trade negotiations and start from a position of strength. As shown by our recent research, the US is a major foreign investor in the UK’s creative industries, with overseas investors attracted to UK talent and skills, IP and market access.

There are further areas for consideration in support of creative service exports to the USA. Alongside negotiating on services trade measures, the Resolution Foundation has noted the importance of strengthening digital trade with partners like the USA (to which the creative industries are a significant contributor).

Providing additional support for UK firms – particularly creative SMEs – to develop and implement strategies to access the US market will be needed. And of course, this has to be balanced with strengthening trade to emerging markets and with developing trade with the EU.

We will have to wait to find out what Trump’s inauguration will really mean for the UK’s creative industries exports but getting it right will be crucial to unlocking the economic potential of the sector to drive the UK government’s growth mission.