London, March 27, 2025 – Donald Trump’s plan to hit competitors, foes and allies alike with trade tariffs will hammer Rachel Reeves hopes of leading a UK economic recovery, experts warned today.
The Office for Budget Responsibility (OBR) warned that if the protectionist US plan developed into a full-blown global trade war it could reduce UK GDP by a full 1 per cent on its own.
The worst-case scenario, in which Trump hits the rest of the world with 20 per cent import taxes to protect US domestic businesses, would also increase inflation by 0.6 per cent.
The Chancellor stressed the grim realities facing the country as she delivered her Spring Statement to the Commons, arguing the ‘world has changed’.
Speaking in the Commons, the Chancellor sought to pin much of the UK’s economic woes on ‘increased global uncertainty’.
Her warnings about a world ‘that is changing before our eyes’ was largely directed at the economic impact of war in Ukraine, and the West’s ongoing clash with Russia.
However, this warning could also be interpreted as a signal that Donald Trump’s tariffs on all imports to America will hit the British economy.
Ministers including Business Secretary Jonathan Reynolds have been wooing the Trump administration to avoid being hit by the worst of the tariffs.
Mr Trump has already imposed tariffs on UK and EU steel and aluminium imports, as well as on Canada, China and Mexico in recent weeks, leading to a wave of retaliatory tariffs around the world.
He has also christened April 2 ‘Liberation Day’, vowing to impose ‘reciprocal’ levies offsetting those of all trading partners.
The action aims to shrink a $1.2 trillion global goods trade deficit by raising US tariffs to levels charged by other countries and counteracting their non-tariff trade barriers.
Trump said on Monday that tariffs on cars are coming soon, but indicated that not all of his threatened levies would be imposed on April 2 and some countries may get breaks.
Media reports have suggested Britain could slash the digital services tax – a levy on big tech companies – in order to avoid being hit.
Lib Dem Treasury Spokeswoman Daisy Cooper said: ‘Donald Trump is wreaking havoc on the world economy with his destructive tariffs.
The Chancellor said she would seek economic stability, but there is no economic stability to be found in relying on the whims of this chaotic White House. (The Mail)
