Donald Trump’s proposals to impose hefty tariffs on goods entering the US could deal a £20bn blow to the UK economy, analysts have warned.
The president-elect’s plan to impose 60% tariffs on Chinese products sold to US companies, along with 20% tariffs on all other imports, “poses challenges” for the UK government, according to the Center for Economics and Business Research (CEBR). .
CEBR estimates that such measures, if implemented without retaliation, could reduce UK GDP by 0.9% by the end of a potential Trump administration. Based on 2023 figures, this equates to a loss of £20 billion to the UK economy.
Meanwhile, National Institute for Economic and Social Research (NIESR) forecasts suggest that even a 10% tariff could cut UK economic growth by 0.7 percentage points.
CEBR noted that the most obvious way to mitigate the impact is to secure a free trade agreement with the United States, but acknowledged that issues around food standards make this unlikely. Instead, she urged ministers to strengthen the UK’s position as a green technology leader, especially in light of Trump’s expected rollback of Joe Biden’s groundbreaking inflation-reducing law.
Economist Sarah Pineros said: “The Chancellor faces a pivotal period to work on her pro-growth agenda and position the UK as a competitive destination for investment.
“Ultimately, while US tariffs and increased protectionism pose challenges, other proposals under the new Trump administration also provide opportunities for the UK to adapt and thrive.
He added: “Without strengthening its approach, the UK risks enduring all the pain associated with a Trump presidency without realizing the potential gains.”