United Kingdom a Top Trading Partner and Economic Driver in California

Walking along the high streets in California, like Rodeo Drive in Beverly Hills or Union Square in San Francisco, it is easy to recognize best-known British brands like Burberry, Cadbury, Land Rover, and Reebok. But the overall economic impact of the United Kingdom in the state is far more significant than the proliferation of consumer goods.

In fact, California and the UK trade billions of dollars in goods each year – everything from transportation equipment, computers, and chemicals to agricultural products and beverages.

The value of bilateral goods traded between California and the UK exceeded $11.5 billion when measured two years ago, and UK-supported businesses employ thousands of Californians, contribute significantly to statewide payrolls, and help build the state’s tax base. And this mutually beneficial relationship is only expected to grow.

The World Trade Center Los Angeles and the British Consulate General Los Angeles have studied the trade relationship between the UK and California and recently published a detailed report describing the impact of UK trade across the state.

 The results are significant and show that the UK is second only to Japan as a trading partner with California. The state is home to more than 2,430 foreign-owned enterprises from the UK that operate in 45 of California's 58 counties.

These businesses help fund more than 111,000 jobs and contribute more than $9 million per year in estimated wages to California residents.

The majority of these jobs are in professional and business services as well as manufacturing. The United Kingdom also supports employment in wholesale trade, transportation, warehousing, utilities, and retail trade among other sectors. 

UK creates professional and business service jobs

The majority of professional and business service jobs are based in Orange, Los Angeles, San Francisco, Santa Clara, and San Diego counties. The bulk of manufacturing positions are based in San Diego, Los Angeles, Ventura, Orange, Santa Clara, and Contra Costa counties. Wholesale jobs are largely in San Bernardino, Los Angeles, and Orange counties. The vast majority of transportation, warehousing, and utilities positions are in Los Angeles while retail trade positions are most prominent in Orange, Los Angeles, Alameda, and San Diego counties.

Los Angeles County a center for UK investment

UK investment in California as a whole is heavily concentrated in Los Angeles County. Almost a quarter of British foreign-owned companies and associated jobs are located in the county. The top industries are professional and business services, but Southern California also features many UK-related manufacturing, transportation, warehousing, and utilities jobs, as the county is a recognized logistics hub for moving goods by both land and sea.

• UK-owned entities in Los Angeles are predominantly in financial services, wholesale trade, retail trade professional and business services, and manufacturing.
• UK enterprises in San Diego are dominated by professional and business services, retail trade, and manufacturing.
• San Francisco County also has a large number of British-owned entities, led by professional and business services as well as financial services.

 Robust bilateral trade on the rise – more cars than computers

Despite being more than 5,000 miles and an ocean apart, the UK and California have robust bilateral trade, measured at more than $11 billion in value in 2019. (Such trade fell during 2020 due to the Covid-19 pandemic but was still respectable at more than $9 billion.) A swift recovery is projected as California continues to export a significant amount of transportation equipment (including motor vehicles), computer electronic products, and chemicals.

Transportation equipment has been particularly strong as those exports grew by 74% in the past two years and actually replaced computer electronic equipment as the largest export category from California to the UK.

In 2020, California exported more than $4.5 billion worth of goods to the UK, which included more than $1 billion in transportation equipment, more than $1 billion in computer electronic products, and more than $600 million in chemicals. The total also included miscellaneous manufactured commodities, electrical machinery, beverage and tobacco products, agricultural products, and fabricated metal products as well as electronic equipment, appliances, and components.

California also imported more than $3.3 billion worth of goods from the UK, including more than $1.3 billion in transportation equipment, more than $400 million worth of computer electronic products, and more than $335 million in machinery. The total represents a decrease of more than 33%, year-over-year, with Covid-19 as the main hindering factor. Regardless, California remains a significant trading partner with the UK.

California residents often look across the Pacific when they think of foreign investment, but the United Kingdom is the second-biggest investor in the state, creating hundreds of thousands of jobs and trading billions of dollars in goods. This informative report helps demonstrate the mutually beneficial relationship between California, the largest of the United States, and the United Kingdom.

Emily Cloke