Britain must brace for the potential consequences of new import tariffs as the world anticipates the start of a trade war, Foreign Secretary David Lammy warned. US President Donald Trump has threatened to impose tariffs of 20 per cent or more on imports from around the globe, with measures expected to be announced on Wednesday, referred to as “Liberation Day.” Global markets are jittery, with one study estimating that a trade war could cost the world £1.1 trillion, while 25,000 jobs in the UK are at risk, particularly within the car manufacturing industry.
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The Institute of Public Policy Research (IPPR) highlighted the severe impact of these tariffs, suggesting that the UK’s car manufacturing sector could be destabilised. Goldman Sachs analysts have revised their forecast for the UK’s GDP growth, predicting a more significant impact from tariffs on the European Union. Chancellor Rachel Reeves has acknowledged the serious consequences of the tariffs, while Business Secretary Jonathan Reynolds remained optimistic but unable to provide a clear timeline for a potential UK-US trade deal.
In the face of the looming tariffs, Ireland has expressed concerns, warning that up to 80,000 jobs could be lost in the worst-case scenario. David Lammy emphasised the importance of ongoing discussions with the US administration to secure an economic agreement, though he noted that Britain must prepare for the worst. The Institute of Public Policy Research (IPPR) has warned that employees in companies like Jaguar Land Rover and Mini are particularly vulnerable to the economic fallout from a potential trade war.
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Further research indicates that the global impact of the trade war could result in a loss of $1.4 trillion (£1.1 trillion), with escalating scenarios of tariffs between the US, Canada, Mexico, and China. As discussions continue, the UK government is considering offering US tech firms a large tax cut to avoid a trade war. These proposed changes to the Digital Services Tax (DST) could appease President Trump, who has complained about the tax’s impact on US firms, potentially generating £1.2 billion by the end of the decade.
