If the president-elect imposes a blanket 20% tariff on all imports into the US, the UK could face a £22bn hit on its exports, according to experts.
The latest analysis from economists at the University of Sussex's Centre for Inclusive Trade Policy (CITP) suggests the tariffs could lead to global exports from the UK falling by at least 2.6%.
Mr Trump has promised a 20% tax on all imports on several occasions on the campaign trail, as well as a hefty 60% tariff on Chinese imports. The subsequent decline in trade would be equal to a 0.8% decrease in British economic output.
Researcher Nicolo Tamberi wrote in a blog post that, despite the aggressive nature of the pledges, the “possibility of these tariffs being imposed is certainly there”.
Read on for more details on how this could affect the UK economy.
What sectors would be affected most by the tariffs?
Although the 20% tax would affect any industry that exports to the US, the ones that would experience the brunt of it are likely to be fishing, petroleum and mining. Those industries’ exports could fall by as much as a fifth. In addition, the pharmaceutical and electrical sectors would be hit.
What’s more, it is not just exporters who would feel the change. Operations companies, like those providing transport, would experience knock-on effects, as well as services like insurance and finance.
Could any sectors benefit?
It’s not all bad news. Some sectors could benefit from the even higher taxes levelled at Chinese exporters, such as textiles and clothing.
How has the UK responded to Trump’s plans?
While speaking on the BBC's Newscast podcast, Foreign Secretary David Lammy said: “We will seek to ensure and to get across to the United States – and I believe that they would understand this – that hurting your closest allies cannot be in your medium or long-term interests, whatever the pursuit of public policy in relation to some of the problems posed by China."
Elsewhere in the Cabinet and beyond, Chancellor Rachel Reeves and Bank of England Governor Andrew Bailey have both affirmed that they will continue to make the argument for free trade. Reeves also reportedly hopes to be able to make a deal on behalf of the UK.
