The UK could face a £22bn hit to its exports if Donald Trump imposes a blanket 20% tariff on all imports into the US, according to a new analysis.
A new analysis from the University of Sussex’s Centre for Inclusive Trade Policy (CITP) warns that the UK could face a £22bn blow to its exports if Donald Trump follows through on his campaign pledge to impose a 20% tariff on all U.S. imports. Trump’s proposed tariffs, which could also include a 60% tax on Chinese imports, could cause UK exports to drop over 2.6% due to diminished U.S. trade and global knock-on effects, equating to a 0.8% reduction in annual UK economic output.
Sectors at Risk
Economist Nicolo Tamberi noted that while these tariffs might serve as a negotiating tactic, they are plausible under Trump’s policy direction. The UK sectors most vulnerable include fishing, petroleum, and mining, potentially facing a 20% decrease in exports. Additionally, pharmaceuticals, electricals, and non-exporting firms dependent on trade—such as transportation and finance—could experience economic strain. Conversely, sectors like textiles might gain from reduced competition if Chinese exports are heavily taxed.
Political and Diplomatic Reactions
Foreign Secretary David Lammy emphasized that the UK would work to ensure the U.S. understands the long-term impact of harming allies. Former UK ambassador to the U.S., Lord Darroch, expressed pessimism, cautioning that Trump may expand tariffs beyond his initial term’s steel and aluminum taxes. Chancellor Rachel Reeves and Bank of England Governor Andrew Bailey both reiterated their commitment to advocating for free trade principles.
Strategic Choices for the UK
The UK may face a choice between negotiating a side deal with a potential Trump administration to avoid tariffs or collaborating with European and Western allies to counteract these policies. While CITP’s analysis does not factor in likely retaliatory tariffs from Europe or Asia, the International Monetary Fund (IMF) has warned that an extensive trade war could cause global economic shrinkage, comparable to the economies of France and Germany combined.
