How has the UK’s trade changed over the past 100 years?

Debates about globalisation and trade policy have deep historical roots. Patterns in the goods and services bought and sold by the UK have shifted over the past century, alongside the framework that governs world trade – but international commerce remains a defining feature of the nation’s economy.

Comparing British trade in 1926 with that of today reveals both striking changes and surprising continuities. Over the past century, the goods that the UK buys and sells have changed dramatically, its principal trading partners have shifted, and the policy framework governing world trade has been transformed. Yet, as in 1926, the UK today is a highly open economy, deeply integrated into global markets through international commerce.

This article explores the changes and constants in the composition of trade, the UK's trading partners and the policy environment over the past 100 years. It forms part of a series to mark the centenary of the Economic History Society.

The sectoral and commodity composition of trade

Historically, the UK has been highly integrated in the global economy, with exports accounting for a large share of the country’s production and imports a significant proportion of the country’s consumption.

In 2025, the UK’s total trade – the combined value of exports and imports – was the equivalent of 63% of the country’s GDP (Department for Business and Trade, DBT, 2026; Office for National Statistics, ONS, 2026). Even in 1926, it was impressively high at 54% (Bank of England, 2024).

Today, as in 1926, the UK exports a greater value of services than it imports, consistent with the country’s relatively skilled labour supply and London’s longstanding position as a world-leading centre (if no longer the world-leading centre) of international commerce.

What is more noteworthy is that services now comprise a much greater share of both the UK’s exports and its imports (see Figure 1). Whereas in 1926, services such as finance, insurance and shipping comprised one-quarter of the UK’s exports, today the share is 59%.

Figure 1: Division of UK trade between goods and services, 1926 and 2025

Sources: 1926 goods: Schlote, 1952, pp. 123, 126, and 128; 1926 services: Sefton and Weale, 1995; 2025 goods and services: UK DBT, 2026.

While goods still account for the majority of the country’s imports, the share of goods imported has declined too, in favour of services.

This increased share of services in trade is not a UK-specific phenomenon. It is one that can partly be explained by the tendency for consumers to allocate an increased share of their income to the consumption of services, as their income increases – and in the past century, median real wages in the UK have increased many times over.

Further, trade in services globally has been facilitated by advances in information and communications technologies, such as the internet (Freund and Weinhold, 2002).

Considering just the UK’s trade in goods, or ‘visible’ trade as it was once commonly known, the sectoral pattern in 1926 was much the same as it had been during Victorian times. Manufacturing accounted for more than 80% of the country’s exports (see Figure 2). To the extent that the country exported primary sector goods at all, much of it was coal.

Figure 2: Division of UK goods trade between primary sector and manufacturing, 1926 and 2025

Sources: 1926: Schlote, 1952, pp. 123, 126, and 128; 2025: United Nations Comtrade Database.
Notes: For 1926, manufacturing consists of ‘finished manufactured goods’, the residual being primary sector trade. For 2025, manufacturing consists of SITC categories 5-8, the residual being primary sector trade.

In 1926, primary sector goods made up over 80% of the country’s imports. While manufactures remain the majority of the UK’s exports of goods, they now constitute the majority of the country’s imports of goods as well.

The diminished share of primary sector goods in imports can be explained by Engel’s Law: as income rises, the percentage of income spent on foodstuffs falls (Houthakker, 1987). As a densely populated island, much of the food consumed in the UK was, and still is, imported.

In 1926, the UK exported a vast range of manufactures, including lower-value-added products such as textiles. In the interwar years, the UK’s manufactured exports were specialised in industries that required relatively less ‘human capital’ – what might be described as knowledge and skills (Crafts and Thomas, 1986).

In the 1920s, the UK’s comparative strengths in global manufacturing markets were in the older industries of railways, ships and textiles (Crafts, 1989, p. 130). At the time, the UK was lagging behind Germany and the United States in such ‘high-tech’ industries as cars, electricals and industrial equipment.

Today, the UK’s exports are concentrated at the more skilled end of the spectrum. The three leading industries within the UK’s goods exports are mechanical power generators, medicinal and pharmaceutical products, and cars (DBT, 2026).

The UK’s trade partners

For many, the history of the UK’s overseas trade conjures up the word ‘Empire’. In 1926, the UK did trade a lot with the Empire, but it traded more with countries elsewhere. Trade partners within the Empire bought 45% of the UK’s goods exports in 1926, while just 28% of the UK’s goods imports were purchased from across the Empire (Schlote, 1952, p. 163).

Although the Empire accounted for the minority of the UK’s trade on both the export and import side, the UK traded considerably more with the overseas British Empire than would be expected for polities of their collective economic size and distance from the UK (Eichengreen and Irwin, 1995, p. 15).

Some of this ‘Empire effect’ on British trade would have been due to the preferential tariff policies that UK exports enjoyed in Dominion markets, such as Canada (Keay and Varian, 2024).

Incidentally, it should be noted that the UK did not offer very much in the way of tariff preferences to its imports from the Empire until the early 1930s. Then, preferential tariffs led to a very substantial reorientation of Britain’s imports towards the Empire, raising the share of the Empire in Britain’s imports by approximately 8 percentage points (de Bromhead et al, 2019, p. 347). But in 1926, hardly any preferences for imports from the Empire had been enacted.

Other drivers of the Empire effect on British trade were, just as in the 19^th century’s ‘first era of globalisation’, the deep commercial and interpersonal networks that had accumulated over generations (Magee and Thompson, 2010, pp. 117-69).

The Commonwealth, the successor to the British Empire, is of considerably less significance to the UK’s trade in the 21^st century than the Empire had been in the interwar period. It has been calculated that in 2023, the Commonwealth accounted for just 10% of the UK’s exports and 9% of its imports – across both goods and services (Ward, 2024, p. 11). In contrast, the United States alone purchased 22% of the UK’s exports and supplied 13% of its imports.

The share of the UK’s trade with Europe has been undiminished. Indeed, it has increased over the past century (see Figure 3).

Figure 3: Share of Europe in UK trade, 1926 and 2025

Sources: 1926: Schlote, 1952, pp. 157 and 160; 2025: UK DBT, 2026.
Note: The comparison here is not exact, as there are some territorial differences between ‘Europe’ in 1926 and the European Union in 2025.

The large share of the UK’s trade that is with Europe is entirely consistent with ‘gravity models’ of trade. The underlying assumption of gravity models is that trade is positively correlated with the economic size of the trade partner (Europe is economically large) and negatively correlated with the distance from the trade partner (Europe is a short distance from the UK).

Trade policy

The UK’s trade policy in 1926 could be described as nearly free trade. Aside from some fiscally motivated tariffs on goods that the UK itself did not produce – for example, tea – there were few tariffs intended to protect domestic industries (Varian, 2019).

Today, with respect to tariffs at least, the UK is in a somewhat similar position. The average tariff, calculated by dividing customs revenue by the value of imports, was a mere 3.4% in the UK in 2025 (World Trade Organization, 2026). It was somewhat higher at 9.3% in 1926 (Mitchell and Deane, 1962, pp. 284 and 395).

To appreciate the similarity between the average tariff rates in 1926 and today, one must understand the heights to which tariffs were raised throughout the intervening century.

In 1932, the Import Duties Act applied a tariff of 10% on the majority of the country’s imports, except those from the British Empire, which were exempt. It also created the Import Duties Advisory Committee, which subsequently recommended and implemented even higher tariffs on an array of different commodities. By 1935, the average tariff had risen to 26.4% (Mitchell and Deane, 1962, pp. 284 and 395).

These high tariffs carried over into the post-war decades. In 1964, the UK’s average tariff was, at 36.5%, higher than that of any other major advanced economy in the world (Bown and Irwin, 2015, p. 21).

It was the UK’s accession to the European Economic Community in 1973 and the consequent removal of tariffs on goods imported from other countries in the customs union that contributed, in earnest, to bringing the country’s average tariff rate down from the high levels reached in the early post-war decades.

Conclusion

A comparison of the UK between 1926 and today reveals changes in some respects and constancy in others. The increasing share of services within the UK’s trade, the growing proportion of manufacturing within the country’s goods imports, and the declining share of the Empire/Commonwealth in both the UK’s exports and imports are all significant developments. Across the century, Europe has remained an important trading partner. In 1926 and today, the average tariff is low relative to the level attained in the post-war era.