Britain Braces for Impact as Trump’s Trade War Looms

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The United Kingdom finds itself in a precarious position as President Donald Trump ramps up his trade war, imposing tariffs on America’s closest neighbours and allies. With Canadian lumber, Chinese smartphones, and Mexican tequila now facing steep price hikes in the US, the fear in Whitehall is that Britain may be next in line.  

 

Trump has made no secret of his willingness to target Europe, recently warning that Brussels could face “very substantial” tariffs. After levying 25% duties on Canada and Mexico and 10% on China, he made his intentions clear when asked whether he would extend the measures to the EU. “Am I going to impose tariffs on the European Union? Do you want the truthful answer or should I give you a political answer? Absolutely, absolutely,” he told reporters. “The European Union has treated us so terribly.”  

 

Sir Keir Starmer and his government are scrambling to ensure Britain stays out of the fray, citing US trade data that shows America buys more from the UK than it sells. But experts warn that no country is truly safe from Trump’s unpredictable policies. The UK’s fragile, debt-laden economy faces serious risks, even if it is not directly targeted.  

 

“At the moment we’re hoping we will be faced less [with tariffs], but there may yet be an announcement of tariffs on everybody of 10%,” says David Henig, UK director of the European Centre for International Political Economy. “Right now, nobody knows anything, and it’s really difficult to plan or prepare for. That uncertainty is actually worse, I think.”  

 

In an effort to shield Britain, Starmer has appointed Labour heavyweight Lord Mandelson as the country’s ambassador to Washington. Mandelson, who previously criticized Trump, has changed his tune, calling the US president a “nice” and “fair-minded person” for whom he has “fresh respect.” Other key figures in Starmer’s government, including Treasury Chief Secretary Darren Jones and Foreign Secretary David Lammy, have been publicly emphasizing the strength of the UK-US relationship.  

 

Even if the UK avoids direct tariffs, the economic fallout from Trump’s actions will be felt in Britain. One of the gravest threats is the impact on borrowing costs, which could affect both the Treasury and ordinary homeowners. Julian Jessop, an independent economist, warns that the greater danger is “the spillover from higher US interest rates rather than the impact of tariffs themselves. This is bad news for the UK because of the knock-on effect on our interest rates and our public finances.”  

 

Chancellor Rachel Reeves is already facing pressure over rising borrowing costs and the risk of breaching her fiscal rules. She will be carefully studying forecasts from the Office for Budget Responsibility (OBR) ahead of her spring statement in March. If the numbers don’t add up, she may have no choice but to implement spending cuts or tax hikes.  

 

Britain’s economy is also deeply tied to the European Union, and a slowdown in the EU due to US tariffs would have serious consequences. “It’s a negative for the world economy and negative for the UK,” says economist Richard Thwaites.  

 

Despite Brexit, the EU remains Britain’s largest trading partner, accounting for £356bn in exports in 2023—42% of all UK trade. Jessop warns that tariffs on Europe would be particularly damaging. “If he imposes tariffs on the European Union, which it looks like he will, that’s another blow to an economic region that is already very fragile. The biggest knock-on effect, I think, would come from tariffs on the EU rather than from what is proposed on China, Mexico or Canada.”  

 

He adds that the UK has already suffered from weak export demand, largely due to sluggish growth in key European economies. “One of the reasons why UK exports have been weak over the last few years, arguably I think more important than Brexit, has been the weakness of demand in these countries. Germany is in a five-year recession and will be particularly vulnerable if or when Trump imposes tariffs. So we are vulnerable from that direction.”  

 

For now, British officials are left with little choice but to try and stay in Trump’s good graces. Figures like Mandelson are suddenly eager to praise the president in the hope that he will spare Britain from the worst of his trade war. But as uncertainty mounts and economic risks grow, the UK may find that avoiding the fallout is easier said than done.

 

Based on a report by Daily Telegraph 2025-02-04