What does a Trump presidency mean for the UK?

Today, hidden from the icy January cold inside the Capitol, Donald Trump becomes the 47th President of the United States. The President is riding on a high, fresh from hosting a rally for his supporters on Sunday where he promised to bring down inflation, bring back jobs to America and impose tariffs on competitors around the world. But whilst Trump may be insulated from the cold today, how might the UK’s economy fare when exposed to an increasingly protectionist United States?

What has Trump said about tariffs?

Prior to the election, Trump promised to impose a 60% tariff on all goods from China and up to 20% tariffs on goods from elsewhere. But despite labelling himself “Tariff Man”, Trump’s other pledges - such as bringing down inflation - would be hard to achieve with such a policy, as American businesses would almost certainly need to hike prices for domestic customers to cover the extra import costs.As it stands, the American economy does not have the capacity to completely isolate itself from global supply chains.

More recently, Trump has promised to impose a 25% tariff on all Canadian and Mexican imports on his first day in office, often bemoaning the latter as a backdoor entrance for Chinese goods into the American market. Elsewhere, Germany’s Economic Minister, Robert Habeck has warned that his country may be the main target of Trumpian tariffs on the European Union. Trump’s first presidency illustrated his dislike of the EU and during his campaign in 2024 he asserted that “they [EU] are going to have to pay a big price”.

What has the UK government said about Trump's tariffs threat?

Darren Jones  (Chief Secretary to the Treasury) has said publicly that he doesn't believe Trump would place tariffs on UK goods - but that doesn't mean the Government isn't preparing for such an eventuality. Business and Trade Secretary Jonathan Reynolds has expressed concern about the potential impact of tariffs given the “very globally oriented (nature of the) economy” - fears felt across global markets that reactionary reciprocal tariffs could lead to inflation throughout the international supply chain. Currently the UK exports around £60 billion worth of goods to America, accounting for 15.4% of our total goods exports.

On Friday, Prime Minister Keir Starmer expressed his willingness to open negotiations with the US for a UK-US trade deal, despite previous concerns over lower US standards on agricultural goods such as chlorinated chicken. 

What happened during Trump's last presidency?

Trump is famed for his unpredictability, and with the difficult challenge of appeasing American consumers and his own protectionist instincts the next four years are likely to be erratic. The first 15 -months of Trump’s first term saw tariffs placed on just 4.1% of U.S. imports. He focused initially on China before extending tariffs to the EU, with particular tariffs on steel and aluminium for UK exports.

When the first Trumpian tariffs were imposed on the UK, the country was still a member of the EU and therefore acted as part of the trading bloc to introduce retaliatory tariffs on a wide range of US goods. Upon leaving the EU, Liz Truss (then-International Trade Secretary) continued the policy of retaliatory tariffs on American goods. Whilst Trump did follow through on his promise from his first Presidential campaign to pursue high tariffs on Chinese goods, his other suggestion that he might enact a blanket tariff of 10% on all imports was instead focused on specific products like steel and aluminium.

How should the UK respond to Trump?

To mitigate the threat from an erratic President who clearly views trade as a bargaining tool, the UK should prioritise trade with our largest and closest trading partner. The UK exported £185 billion worth of goods to the EU in 2023, over three times the amount of goods exported to America. In total, EU trade accounts for 42% of all British exports in goods and services, and with the EU likely to be under a similar tariff regime (if not more stringent) to the UK, a Trump presidency offers both the UK and EU an incentive for closer cooperation.

Lord Kim Darroch, Former British Ambassador to the USA and member of the UK Trade and Business Commission: “The US is an invaluable British ally but by definition, the Government cannot prioritise trade with both America and the EU, a strategy that risks delivering the worst of all worlds. Recent history suggests that Trump responds to strength and there is strength in numbers. We are better working with the incoming US administration in concert with our European allies.” 

The belief that Britain's trading priorities should lie with the EU rather than the US is shared by the public. A poll of over 4,000 people conducted by YouGov on behalf of Best for Britain illustrated that 44% of Brits think that Britain's economic future lies with the EU compared to just 19% who favour prioritising trade with the USA. As the world braces itself for four more years of MAGA mania and all the corresponding uncertainty a Trump presidency brings, now is the time to align with our closest and most reliable allies in the form of the European Union. 

This article first appeared on Best for Britain