Analysts warn that Donald Trump’s proposed tariffs on imports to the US could deliver a £20bn blow to the UK economy.
The President-elect’s plan to impose a 60% levy on Chinese goods and a 20% tariff on all other imports “presents challenges” for the UK government, according to the Centre for Economics and Business Research (CEBR).
CEBR estimates that, if implemented without retaliation, these tariffs could lower UK GDP by 0.9% by the end of Trump’s term, equating to a £20bn impact based on 2023 economic data.
Additionally, the National Institute of Economic and Social Research (NIESR) projects that a 10% tariff could reduce UK economic growth by 0.7 percentage points.
CEBR noted that the most effective way to avoid this economic hit would be to secure a free trade agreement with the US, though ongoing disputes over food standards make such a deal unlikely.
Instead, it urged UK ministers to strengthen the country’s leadership in green technology as a countermeasure against Trump’s potential reversal of Biden’s Inflation Reduction Act (IRA).
Economist Sara Pineros commented: “The Chancellor faces a crucial moment to advance her pro-growth agenda and enhance the UK’s appeal for investment.
“While rising US tariffs and protectionism pose challenges, there are also opportunities for the UK to adapt and benefit under a new Trump administration. Without decisive action, the UK risks enduring the negative impacts of Trump’s policies without leveraging potential gains.”
