Trump’s tariff plans could cost UK economy £20bn, analysts warn

Donald Trump’s proposals to impose hefty tariffs on goods entering the United States could deliver a £20 billion blow to the British economy, analysts have warned.

The President-elect’s plan to levy a 60% tariff on Chinese products sold to American businesses, alongside a 20% tariff on all other imports, “poses challenges” for the UK government, according to the Centre 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 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% tariff could cut UK economic growth by 0.7 percentage points.

The CEBR noted that the clearest way to mitigate the impact would be to secure a free-trade agreement with the US, but acknowledged that issues over food standards make this unlikely. Instead, it urged ministers to bolster the UK’s position as a leader in green technology, particularly in light of Trump’s expected rollback of Joe Biden’s flagship Inflation Reduction Act (IRA).

Economist Sara Pineros said: “The Chancellor faces a pivotal period to act on her pro-growth agenda and position the UK as a competitive destination for investment.

“Ultimately, while US tariffs and rising protectionism pose challenges, other proposals under a new Trump administration also present opportunities for the UK to adapt and thrive.

“Without strengthening its approach, the UK risks taking all the pain associated with a Trump presidency without realising the potential gain.”