Macro impact of Trump’s tariffs on the UK shouldn’t be overstated

Our baseline forecast assumes that President-elect Trump won’t increase tariffs on US imports from the UK. In fact, the main impact on the UK outlook from Trump’s victory comes from stronger global demand stoked by looser US fiscal policy.

What you will learn:

• We expect the new administration to take a targeted approach to tariffs and the UK will be well down the list of Trump’s priorities. The US has a goods trade surplus with the UK, the UK imposes relatively low tariffs on imports from the US, and those tariffs have a minimal impact on US jobs.
• We view a ‘full-blown Trump’ scenario in which large, across-the-board tariff increases are imposed as unlikely
• Even so, the macroeconomic impact on the UK would still be limited. Our modelling suggests that if the UK retaliated, the peak hit to UK GDP would be 0.2ppts in 2027, while prices would rise 0.3ppts above the baseline.