Donald Trump’s proposals to impose heavy tariffs on goods entering the United States could deal a £20 billion blow to the British economy, analysts have warned.
The president-elect’s plan to impose a 60% tariff on Chinese products sold to US companies, in addition to a 20% tariff on all other imports, “poses challenges” for the British government, the Center for Economics and Business Research (CEBR). .
The CEBR estimates that such measures, if implemented without retaliation, could reduce the UK’s gross domestic product (GDP) by 0.9% by the end of a potential Trump administration. Based on 2023 figures, this amounts to a £20 billion hit to the UK economy.
Meanwhile, forecasts from the National Institute of Economic and Social Research (NIESR) suggest that even a 10% tariff could reduce UK economic growth by 0.7 percentage points.
The CEBR noted that the clearest way to mitigate the impact would be to conclude a free trade deal with the US, but acknowledged that issues with food standards make this unlikely. Instead, it urged ministers to strengthen Britain’s position as a leader in green technology, especially in light of Trump’s expected rollback of Joe Biden’s flagship Inflation Reduction Act (IRA).
Economist Sara Pineros said: “The Chancellor faces a crucial period to deliver her pro-growth agenda and position Britain as a competitive destination for investment.
“While US tariffs and rising protectionism pose challenges, other proposals under a new Trump administration ultimately also provide opportunities for Britain to adapt and prosper.
“Without strengthening its approach, Britain risks absorbing all the pain that comes with a Trump presidency without realizing the potential gains.”