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E-mail Xinhua, April 4, 2025
By Zhao Xiaona, Zhao Xiuzhi, Larry Neild
LONDON, April 3 (Xinhua) -- U.S. President Donald Trump's sweeping tariff policy, including a 10 percent levy on UK goods and 25 percent on foreign automobiles, has drawn sharp criticism from British economists and industry leaders.
While framed by Trump as a move toward "fair" and "reciprocal" trade, experts warn the measures risk reigniting global protectionism and inflicting lasting harm on both international trade flows and domestic industries.
DISRUPTION TO GLOBAL TRADE ORDER
Announced under the banner of "reciprocity," the new tariffs are calculated based on bilateral trade deficits rather than existing tariff levels. Though the UK faces a comparatively lower 10 percent rate, economists argue the policy marks a dangerous departure from multilateral trade norms and sound economic principles.
Iain Begg, a professor from the London School of Economics and Political Science, said there is broad agreement among economists that Trump's tariff escalation will likely weaken global growth. "There is a broad consensus that this kind of tariff onslaught will slow the global economy -- especially if it triggers retaliation and escalation," Begg told Xinhua.
He added that Trump's actions reflect a zero-sum understanding of trade, which stands in contrast to long-standing economic theory. "The idea that trade is a zero-sum game, when two hundred years of economic analysis signals gains from trade, could slowly be revived," he said.
Begg also noted that while the UK may have avoided the highest tariff rates, it is not immune to broader consequences. "A reasonable expectation would be that the UK would engage in trade talks with other partners aimed at avoiding separate trade wars," he said.
According to estimates from the UK's Office for Budget Responsibility (OBR), a worst-case scenario involving a global trade war could reduce Britain's gross domestic product (GDP) peak by as much as one percent. The National Institute of Economic and Social Research (NIESR) has warned that a global tariff regime of 10 percent could stall UK growth entirely, while 20 percent tariffs could tip the country into recession.
UK INDUSTRIES FACE HIGHER COSTS, LOWER DEMAND
Despite avoiding the steepest tariff hikes, UK exporters are bracing for significant disruption. The U.S. is the UK's largest single trading partner, with 58.7 billion pounds (76.99 billion U.S. dollars) worth of goods exported in 2024, accounting for over 16 percent of total UK goods exports. Key sectors, such as automotive, whisky, and pharmaceuticals, face heightened pressure.
The automotive industry is among the hardest-hit. The U.S. accounted for 6.4 billion pounds in UK car exports last year. With a 25 percent tariff now applied to foreign-made vehicles, British manufacturers such as Jaguar, Land Rover, and Rolls-Royce face a potential decline in sales and output.
Steve Nolan, senior lecturer in economics at Liverpool John Moores University, told Xinhua that the impact would be uneven but substantial. "You can't absorb a 25 percent tariff without passing the cost on to consumers or cutting production. Either way, someone pays," he said.
High-end products such as Scotch whisky are also vulnerable. The Scotch Whisky Association reported over 1 billion pounds in annual exports to the U.S., and warned that even a 10 percent tariff could dampen demand. "These are heritage goods, but they are still price-sensitive in competitive markets," Nolan added.
The Federation of Small Businesses (FSB) warned that nearly 60 percent of small UK exporters trade with the U.S., many without the financial flexibility to withstand sudden tariff increases. "Tariffs will cause untold damage to small firms trying to stay profitable," said FSB policy chair Tina McKenzie. "This could lead to job losses and permanent market exits."
Beyond direct costs, experts also fear trade diversion effects. Products blocked from the U.S. could be redirected to the UK, intensifying competition and driving down prices. "If the U.S. closes its doors, those goods will look for new markets. The UK is an obvious target, but also a vulnerable one," said Nolan.
GROWING CONCERN FROM INDUSTRY LEADERS
Business leaders across the UK have responded with growing concern. Make UK, the national manufacturing federation, called the tariffs "highly disappointing," especially given the longstanding balance in UK-U.S. trade. Chief Executive Stephen Phipson noted that the strength of the bilateral relationship should have encouraged more -- not less -- market openness.
"These tariffs are a setback for industries on both sides of the Atlantic. UK exporters will suffer, and American consumers will face reduced choice and higher prices," Phipson said.
The Society of Motor Manufacturers and Traders (SMMT) echoed this sentiment, stating that a 25 percent tariff on British cars is "deeply damaging" to a sector already facing multiple global headwinds. "The U.S. is a vital export destination. These tariffs hit at the heart of our competitive advantage," said CEO Mike Hawes.
John Bryson, a professor and expert in enterprise at the University of Birmingham, emphasized that the UK's 10 percent rate should not be mistaken for immunity. "Some might view this as a Brexit benefit, but that's misleading. We're still exposed, and we're a smaller player negotiating without the leverage of a major trading bloc," he told Xinhua.
Bryson warned that retaliatory trade behavior could spiral quickly. "If countries begin redirecting their exports to smaller markets like the UK, we may see rising pressure on domestic producers, job losses, and calls for further protectionism -- a classic downward cycle."
In response, the UK government has launched a four-week consultation with businesses to assess the implications of potential retaliatory tariffs, while continuing trade talks with Washington. British Business Secretary Jonathan Reynolds told Parliament that the UK remains committed to reaching a deal, but stands ready to defend its economic interests. "We have a range of tools at our disposal and we will not hesitate to act," Reynolds said. (1 British pound = 1.31 U.S. dollar) Enditem
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