Trump's tariffs would cut UK growth by half, say experts

UK growth would be halved in the event that Donald Trump wins the US presidential race and imposes the swingeing tariffs he has threatened, a leading thinktank said yesterday.

- Larry Elliott

The National Institute of Economic and Social Research (NIESR) said the protectionist measures planned by the Republican challenger for the White House would result in weaker activity, rising inflation and higher interest rates from the Bank of England.

Ahmet Kaya, an NIESR economist, said that were Trump to go ahead with a 60% tariff on Chinese goods and a 10% tariff on goods from all other countries, the resulting trade war would lower UK growth by 0.7 percentage points and 0.5 percentage points in the first two years.

"The UK is a small, open economy and would be one of the countries most affected," Kaya said. The thinktank has estimated that over two years the UK inflation rate would be three to four points higher while interest rates would be two to three points higher.

In the absence of the Trump tariffs, NIESR forecasts the UK will grow by 1.2% in 2025 and by 1.4% in 2026, with inflation settling at close to the government's 2% target and official interest rates falling from their current level of 5% to 3.25%.