Trump’s Proposed Tariffs Could Cost UK Economy £20 Billion, Analysts Warn

Donald Trump’s proposed tariffs on goods entering the United States could have a significant impact on the UK economy, with experts estimating a potential £20 billion hit to the country’s GDP. The President-elect’s plan to impose a 60% tariff on Chinese products and a 20% tariff on all other imports could lead to economic challenges for the UK, according to the Centre for Economics and Business Research (CEBR).

If the tariffs are implemented without retaliation from other countries, the CEBR projects that the UK’s GDP could fall by 0.9% by the end of a potential Trump administration, equating to a £20 billion reduction in economic output. Meanwhile, the National Institute of Economic and Social Research (NIESR) has forecast that even a 10% tariff could reduce the UK’s economic growth by 0.7 percentage points.

The CEBR emphasized that a free-trade agreement with the United States could be the most effective way to mitigate the negative economic effects. However, it acknowledged that challenges over issues like food standards could make such an agreement unlikely. Instead, the think tank suggested that the UK should focus on strengthening its position as a leader in green technology, particularly given Trump’s expected rollback of President Biden’s Inflation Reduction Act (IRA).

Economist Sara Pineros warned that the UK government faces a critical moment to take proactive steps to counteract the potential economic downturn. “The Chancellor faces a pivotal period to act on her pro-growth agenda and position the UK as a competitive destination for investment,” Pineros said.

She added that while the proposed tariffs and rising protectionism could pose significant challenges for the UK, there may also be opportunities to adapt and thrive under a new Trump administration. However, Pineros cautioned that without a clear strategy to strengthen the UK’s economic resilience, the country could bear the full brunt of the pain from Trump’s policies without reaping the potential benefits.

As the UK navigates the uncertain economic landscape of a potential Trump presidency, analysts urge the government to consider long-term strategies for securing economic growth and strengthening international trade relations. The outcome of these decisions could have far-reaching implications for the UK’s global standing and future prosperity.