If the additional tariffs announced by US President Donald Trump against the United Kingdom come into force, the country's economy could face a recession, according to the analysis company Capital Economics, The Telegraph reports.
A 10% tariff is already in effect on British goods imported into the United States. Trump announced that the measure will be introduced on February 1, increasing to 25% on June 1.
According to analysts, if the additional tariff is imposed, the UK's GDP will shrink by 0.3% to 0.75%. The damage to the country's economy could reach 21.6 billion pounds, The Telegraph reports, citing a World Bank estimate of UK economic growth.
“Given that the UK economy is currently growing by 0.2-0.3% per quarter, if this happened suddenly it could trigger a recession“, said Paul Dales, chief economist at Capital Economics.
The Telegraph notes that the Office for Budget Responsibility (OBR) estimates that current US tariffs will reduce UK GDP by 1%, reducing the country's fiscal buffers by almost 10 billion pounds.
Trump decided to impose additional tariffs on several countries that have sent troops to Greenland amid US plans to seize the island. In addition to the UK, the decision will affect France, Germany, the Netherlands, Denmark, Norway, Sweden and Finland.
The EU is considering retaliatory measures against the new US tariffs. “Politico“ listed retaliatory tariffs on 93 billion euros worth of US goods as a possible option, noting that this would lead to a trade war between the EU and the US.
British Prime Minister Keir Starmer called Trump's decision to impose tariffs on NATO allies “wrong“. “The Guardian“ reported that the British government hopes that Starmer's productive relationship with Trump, which has already helped avoid some US tariffs, could lead to further concessions from the White House.
London is currently refraining from retaliatory measures. According to The Telegraph, the British Treasury has prepared an analysis showing that a trade war between the US and the EU would deal a serious blow to the UK, even if it were not involved. “Raising tariffs around the world would clearly be bad for our economies,” a senior government source told the newspaper.