UK could lose £22bn in exports if Trump imposes 20% tariffs, economists warn
The UK could face a major economic blow if President-elect Donald Trump imposes a 20% tariff on all exports to the US, which could cost British exporters up to £22 billion, according to new research by the Center for Inclusive Trade Policy (CITP ). ) at the University of Sussex.
Economists estimate that UK exports could fall by more than 2.6 per cent as trade with the US falters, creating a negative effect that could further weigh on the global economy. This drop in trade would equate to an annual drop of 0.8% in UK economic output, CITP researchers suggest.
The sectors most likely to be affected include fisheries, petroleum, mining, pharmaceuticals, and electronics, each of which could result in a drop in exports of up to 20%. Apart from direct exporters, industries such as transport, insurance, and finance that support UK trade may also feel the impact of reduced trade flows.
Researcher Nicolo Tamberi warned that the costs are “very real,” noting Trump’s long-standing penchant for using tariffs as a negotiating tool. The UK’s former ambassador to the US, Lord Darroch, expressed similar concerns, saying, “I’m pessimistic… You want to go too far on this. You believe in it—it’s not a lie.”
If put in place, Trump’s tariffs could force the UK to make tough decisions. One option would be to negotiate directly with the US for a release, while another would involve working with other Western allies to show the Trump administration that US traders can also face retaliation.
Foreign Secretary David Lammy emphasized the need to convey the importance of free trade to the US, saying, “Harming your closest allies will not be in your medium or long-term interests.” However, Lord Darroch’s comments suggest that the UK cannot rely on diplomacy alone to get around the tax.
The economic implications extend beyond the UK, with the IMF recently warning that a major trade war could shrink the global economy by around 7%—the equivalent of France and Germany combined.
While some analysts believe that Trump’s tariff strategy may include concessions from US allies, others, such as former Trade Representative Robert Lighthizer, are staunch supporters of an aggressive approach. Chancellor Rachel Reeves and Bank of England Governor Andrew Bailey reiterated their commitment to promoting free trade, warning that protectionist measures could increase inflation and undermine economic stability.
In some sectors, however, UK firms could see a rise. If Trump imposes heavy tariffs on Chinese goods, British textile and clothing businesses may gain ground as competition from Chinese imports diminishes, providing a boost to the domestic market.
As the UK government navigates this complex trade environment, high pricing power casts a shadow over future export strategies, underscoring the challenges that will remain in maintaining free trade in a changing global economy.
