How would Trump’s return impact British exports?

UK (Commonwealth) _ According to a recent estimate, Donald Trump’s impending threat of U.S. trade tariffs may affect £22 billion in U.K. exports, sending shockwaves through the British economy if he slaps a general 20% tariff on all imports into the US.

After winning the U.S. presidential election with a shock victory against Democratic opponent Kamala Harris, the Republican is scheduled to return to the White House in January. Businesses worldwide are assessing how Trump’s second term, and the possibility of taxes on all U.S. imports, would affect trade with their biggest export market once the dust settles.

According to Marco Forgione, head of the Chartered Institute of Export & International Trade, Trump has made it clear throughout the election campaign that America comes first. He wants to increase investment in the United States, reshore as much production and manufacturing as possible, and use trade as a powerful geopolitical tool.

Although Trump has acknowledged that he supports the United Kingdom, we shouldn’t take it for granted and think that there won’t be any repercussions for British producers.

The prospect of a 60 percent tax on Chinese goods and a flat tariff of 10–20% on all U.S. imports are two of Trump’s most menacing trade weapons. Economists say the impact on the British economy cannot be understated because the U.S. is by far the country’s greatest export market.

The Institute of Economic Affairs’ Harrison Griffiths, manager of international programs, laments that the possibility of import duties should “ring alarm bells” for British companies who shipped £58.3 billion worth of goods to the United States in the year preceding August 2024.

He stated that our primary exporters of commodities to the United States, which include some of our most valuable and specialized industries such as automobile makers, the aerospace sector, and pharmaceutical companies, would be most vulnerable to losses.

British exporters would incur higher costs when exporting to other nations, who may also impose retaliatory tariffs, in addition to the United States, according to Ahmet Kaya, principal economist at the National Institute of Economic and Social Research (NIESR) in the United Kingdom.

With the rate of growth being 0.7 percent and 0.5 percent weaker in the first two years after the tariffs [were] applied, Kaya noted, a possible increase in tariffs is likely to have a substantial impact on the U.K. economy. The profitable drinks industry in Britain is one of the sectors preparing for tariffs.

The Wine and Spirit Trade Association’s chief executive, Miles Beale, stated that the business has “clear concerns inherited from President Trump’s first term,” such as “becoming collateral damage in non-industry related disputes over trade once again.”

Beale was alluding to the 25 percent retaliatory duty on single malt Scotch whisky that Trump applied in 2019, which caused a decline in exports from the United Kingdom. In terms of value, the United States is now the top export market for Scotch whisky, with £978 million in 2023 exports.

Trump’s policy, according to Duncan Edwards, head of British American Business, was not created with the intention of specifically targeting British exporters to the United States.

According to him, “their real concern is countries which enjoy a trade surplus with the U.S. but have higher import tariffs than America does on imports from them.” It’s roughly balanced in terms of U.K. goods trade. The aim here is not the United Kingdom.

However, that doesn’t imply that businesses in the UK won’t be affected. Although this is at the higher end of analysts’ projections, Kaya stated that in three years following the implementation of new trade duties, the cumulative U.K. GDP would be about 2.5 percent lower than it would be without additional tariffs.

Smaller companies will be most affected, according to Tina McKenzie, policy head of the Federation of Small Businesses.

“For small international traders in the United Kingdom, the U.S. is the top non-European market,” she stated. One of the main obstacles that small businesses in the United Kingdom face when they trade abroad is the overall cost of trade. Small exporters and prospective exporters would be the most affected by any new tariffs and non-tariff barriers.

“We have a healthy and strong economic connection and as a government we are going to keep to make the case for free trade,” she said, referring to President Trump’s prior tenure as president of the United States. However, she made it clear that if the United States imposed tariffs, the United Kingdom would not sit passively.