Donald Trump’s proposals to impose steep tariffs on goods entering the United States could hit the British economy by £20 billion, analysts have warned.
The President-elect’s plan to impose a 60% tariff on Chinese goods sold to American businesses, and a 20% tariff on all other imports, “poses challenges” for the UK government, according to the Center for Economics and Business Research (CEBR) .
CEBR estimates that these measures, if implemented without retaliation, could reduce UK gross domestic product (GDP) by 0.9% by the end of a potential Trump administration. Based on 2023 figures, this equates to a £20 billion hit to the British economy.
Meanwhile, forecasts from the National Institute of Economic and Social Research (NIESR) suggest that even a 10% tax would reduce UK economic growth by 0.7 percentage points.
The CEBR noted that an obvious way to mitigate the impact would be to secure a free trade agreement with the US, but admitted that problems with food standards made this impossible. Instead, it urged ministers to strengthen the UK’s position as a leader in green technology, especially as Trump is expected to roll back Joe Biden’s Inflation Reduction Act (IRA).
Economist Sara Pineros said: “The chancellor faces an important time to work on her plan to boost growth and position the UK as a competitive investment destination.
“Finally, while US tariffs and rising protectionism pose challenges, other proposals under the new Trump administration also offer opportunities for the UK to adapt and succeed.
“Without strengthening its approach, the UK risks taking all the pain associated with a Trump presidency without seeing the potential benefits.”
