Donald Trump’s proposals to impose hefty tariffs on items getting into the US may ship a £20 billion blow to the British financial system, analysts have warned.
The President-elect’s plan to levy a 60% tariff on Chinese language merchandise offered to American companies, alongside a 20% tariff on all different imports, “poses challenges” for the UK authorities, based on the Centre for Economics and Enterprise Analysis (CEBR).
The CEBR estimates that such measures, if applied with out retaliation, may scale back the UK’s gross home product (GDP) by 0.9% by the top of a possible Trump administration. Based mostly on 2023 figures, this equates to a £20 billion hit to the British financial system.
In the meantime, forecasts from the Nationwide Institute of Financial and Social Analysis (NIESR) recommend that even a ten% tariff may reduce UK financial development by 0.7 share factors.
The CEBR famous that the clearest method to mitigate the influence could be to safe a free-trade settlement with the US, however acknowledged that points over meals requirements make this unlikely. As a substitute, it urged ministers to bolster the UK’s place as a frontrunner in inexperienced expertise, notably in mild of Trump’s anticipated rollback of Joe Biden’s flagship Inflation Discount Act (IRA).
Economist Sara Pineros mentioned: “The Chancellor faces a pivotal interval to behave on her pro-growth agenda and place the UK as a aggressive vacation spot for funding.
“Finally, whereas US tariffs and rising protectionism pose challenges, different proposals below a brand new Trump administration additionally current alternatives 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.”
