Incoming US president Donald Trump’s plan to impose tariffs on imports into the UK will hit the UK economy to the tune of £20bn, according to research.
Mr Trump has said he plans on introducing a 20 per cent levy on most imports to the US in order to help out domestic businesses, with 60 per cent on imports from China.
That will trim the UK’s economic output by 0.9 per cent by the end of his presidency, according to the Centre for Economics and Business Research, a consultancy. This is the equivalent of £20bn, using 2023’s figures for economic output.
The US is the UK’s second-biggest trading partner after the EU and Britain sent £188.2 billion of exports to the US in the 12 months to the end of June, about a third of which were goods and the rest services.
The US is a big market for UK cars, aviation parts such as jet engines, and medicine, all of which could be hit.
Mr Trump’s anti-climate posture could offer an opportunity, however, said CEBR economist Sara Pineros, as Britian could fill the void in clean technology investments.
Mr Trump may roll back Joe Biden’s generous subsidies for green technology, making the country a less attractive place for electric vehicle makers, hydrogen developers and other industries aiming to make and harness low-carbon energy.
This could be a good opportunity for chancellor Rachel Reeves to offer a more upbeat story for Britian’s economy and attract them to the UK, she said.
There is a way out of paying the tariffs, albeit one which the government may find undesirable, she adds: “Seemingly, the clearest path for the UK to avoid Trump tariffs would be to agree to a Free Trade Agreement. Indeed, Trump pursued a deal much more proactively during his first term as president than Biden.
“Such a deal would be doubly powerful, not only by reducing existing trade barriers but also by avoiding the new wide-ranging tariff, making the UK a cheaper source of goods than those economies that are hit with the tariff. Unfortunately, the major sticking point to a deal remains food standards, and tariffs may be used to pressure the UK to accept US demands in this regard.”
The US has long demanded that the UK relax its food regulations to accept US exports.
The most headline-grabbing of these rows has been over chlorinated chicken. In the US, slaughtered chickens are rinsed in chlorine to disinfect them, something which is deemed as unnecessary here in Britain.
According to the UK Soil Association charity, “this is done to treat high levels of bacteria, a symptom of poor hygiene and low animal welfare conditions not allowed in UK farming”.
The US also allows the use of steroids in beef farming, a practice banned in the EU since 1989, as well as genetically modified crops such as corn and soy.
