A leading centre-left think tank said a slump in trade with the EU should prompt ministers to negotiate a fundamental rewrite of post-Brexit rules to bring the UK more closely into line with Brussels.

The Institute for Public Policy Research (IPPR) said Donald Trump's arrival in the White House next week should also encourage the government to take the initiative in negotiating a trade deal with the United States to support growth in UK exports.

Ministers need to consider a wide range of measures to help sectors such as energy, defence, food, communications, healthcare and more, IPPR said in a report revealing the overall decline in the UK's trading position inherited by the Labor government. Pharmaceuticals – Better opportunities to sell products and services overseas.

UK trade policy has been "chaotic" and "leaderless" since the 2016 Brexit referendum, the report said, adding that efforts to strike small deals with non-EU countries since exiting the EU's single market and customs union in 2021 have Come to the end. .

According to the report, it is estimated that compared with remaining within the European Free Trade Area, UK exports of goods to the EU will fall by 27% between 2021 and 2023, while EU imports of goods into the UK will fall by 32%.

Meanwhile, trade is also booming with other G7 countries including the United States, Japan, France and Italy. From 2019 to the end of 2023, the UK's total trade in goods fell by 10%. Data from 2019 to the end of the third quarter of 2023 show that other G7 countries grew by an average of 5%.

Trump’s inauguration next week could trigger a series of restrictive policies from Washington that would be a turning point in global trade policy. The incoming U.S. president has said he wants to make it more expensive for U.S. consumers to buy imported goods that he claims benefit from subsidies. China is his main target, but companies based in the European Union and the United Kingdom could also be affected by tariffs imposed by U.S. customs and passed on to consumers.

Among the policy changes, the IPPR recommended lowering UK import tariffs to support net zero targets, while also seeking to cut tariffs in deals with major trading partners such as India and the United States. Marley Morris, author of the report, said: "Even a small deal with the United States could be beneficial and allow the UK to avoid Trump's new tariff regime."

To mitigate the impact of Brexit, ministers should seek to negotiate a veterinary agreement with the EU to reduce checks on food crossing the English Channel. According to a recent study, this could increase UK agricultural exports to the EU by up to 22.5%, the report said.

Ministers should also seek a mutual recognition agreement (MRA) with the EU to show that UK-made goods meet standards set by Brussels. They should also try to link the UK and EU emissions trading systems to avoid the EU's upcoming carbon border adjustment mechanism, which charges importers a levy that reflects the carbon intensity of certain goods.

Morris, deputy director of IPPR, said: “With just days left before Donald Trump’s inauguration and the government’s intention to ‘reset’ with the EU, the time is ripe for the UK to develop a new trade strategy.

“The challenges are serious: falling goods exports, the breakdown of barriers with the EU and a volatile global economic landscape. But the new strategy should help develop new export support plans, rebuild the UK’s trading relationship with the EU and make our trade agreements modern approach.”