How will Trump's tariffs impact UK and EU trade?
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The return of Donald Trump to the White House could bring changes to global trade, with proposed tariffs raising alarms across markets and sparking urgent questions about the future of economic relations between the US, UK and EU. At the heart of these concerns is Trump’s pledge to introduce universal tariffs of 10% to 20% on all imports and a 60% tariff on goods from China.
Yahoo Finance UK talked to Symphony CEO Brad Levy about the potential fallout for businesses, governments, and consumers.
The UK’s unique vulnerability
For the UK, the stakes are particularly high. The US is Britain’s largest single-country trading partner, accounting for 15.4% of exports, valued at over £60bn annually.
Sectors such as automotive, aerospace, chemicals, pharmaceuticals, and machinery dominate these exports but also face stiff competition from US-based firms.
Levy said adjusting to new trade dynamics would be he complex for businesses. “It’s not that easy to change accounting standards and move your physical businesses around the world, open offices, set up systems,” he said, referencing lessons learned from Brexit.
Read more: What a Trump victory means for UK and Europe trade tariffs
These logistical and financial difficulties could limit UK firms from finding expedient solutions, such as relocating production to the US to avoid tariffs.
This could lead UK companies to either absorb the added costs — cutting into profit margins — or pass those costs on to consumers, potentially losing competitiveness, Levy said.
The ripple effects could extend beyond profit losses. The National Institute of Economic and Social Research (NIESR) estimates that such protectionist measures from the US could slash UK economic growth by 0.7 and 0.5 percentage points in the first two years, while driving up inflation and potentially causing a rise in interest rates.
Challenges for the transatlantic relationship
Political dynamics between a Republican-led US government and the Labour-led UK government could further complicate matters. Levy acknowledged the surface-level tensions but pointed to the potential for behind-the-scenes collaboration.
“At first glance, it will feel very acrimonious — lots of conflict, a lot of noise,” he explained. “But below that, I think there’s going to be more cooperation than people expect. Over time, things will get done.”
The EU’s strategic position
Levy emphasised the economic roles of key countries such as Germany and France in the European Union's response to Trump’s tariffs.
“Germany is a very large market, a manufacturing hub,” Levy said. “France is a very large market in financial services, but also has quite a bit of engineering talent. You can’t treat France and Germany completely the same, in my opinion, from a US perspective.”