President Trump’s imposition of 10% tariffs on the UK, while less than those imposed on other countries, are likely to see growth forecasts downgraded, thousands of jobs lost and further spending cuts, according to analysts.
Responding to the announcement that President Trump is imposing a 10% blanket tariff on US imports of UK goods, and a 25% tariff on all foreign-made vehicles, Emma Rowland, trade policy advisor at the Institute of Directors said the tariffs eliminated hopes that the “UK would be able to avoid the crosshairs of the global trade war. Today’s announcements only add to the challenges businesses currently face in the UK, presenting an additional barrier to growth.”
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“The US is the UK’s largest single trading partner, and an important export market for UK industries, particularly automotive, pharmaceutical, chemicals and whisky.
“Exporters to the US will be forced to review the viability of the US as a destination for their goods, and as a supply chain location. Alternatively, they may well have to reduce their profit margins to remain competitive.”
Rain Newton-Smith, chief executive of the CBI, said there were no winners in a trade war and that the new tariffs were “deeply troubling for businesses and will have significant ramifications around the world”.
She added that a low-key response would be best: “Retaliation will only add to supply chain disruption, slow down investment, and stoke volatility in prices.
“The government has rightfully tried to negotiate a carveout to any incoming tariffs through a bilateral economic deal. As they seek to grow the economy, negotiating stronger trading relationships with all like-minded partners will be foundational to any success.”
Newton-Smith added that free trade was still an important principle: “The UK must use this unpredictable period to double down on its commitment to free, fair and open trade. Doing so will provide businesses with the confidence needed to kickstart growth, foster innovation, and boost productivity.”
Rowland said she was concerned by rising global tensions. “Recent IoD data shows confidence in the prospects for the UK economy already stands at depressed levels,” she said. “Meanwhile, 59% of IoD members are concerned about the impact that rising geopolitical tensions are having on their organisation. An escalation in disruption caused by the tariff agenda will only erode confidence levels further. The OBR estimates that were the average tariff rate between the US and the rest of the world to rise to 20% points, this would reduce UK GDP by 1% at peak and wipe out the chancellor’s fiscal headroom.”
She agreed with Newton-Smith that the “pragmatic and level-headed” approach adopted by the UK government was the right one. She added: “The UK benefits from being an open trading nation, with strongly integrated international links. The IoD support the government’s efforts to sustain the position of UK exporters in an increasingly fragmented global economy.”
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