The US president, Donald Trump, has imposed a 10% tariff on all UK exports to the United States, sparking fears of a global trade war and raising concerns over the impact on the British economy. Although Downing Street had braced for a 20% rate, officials expressed relief at the lower tariff – crediting Keir Starmer’s more conciliatory stance towards the US administration.
Even so, the move is expected to impact UK economic growth. Forecasts could be downgraded, putting thousands of jobs at risk. As a result, further tax rises or spending cuts may be needed in the autumn. Despite mounting pressure, UK ministers have ruled out retaliatory tariffs for now as negotiations on a wider trade deal with the US continue.
UK goods exports to the US total more than £60 billion annually. Officials are pushing for exemptions for key sectors, particularly technology, as part of a broader trade agreement. Trump’s announcement sets a 10% “baseline” tariff on all imports to the US, with some countries facing rates as high as 50%.
Trump also criticised VAT systems, claiming they hinder US firms looking to enter markets such as the UK. Meanwhile, there are fears that cheap goods diverted from US markets – especially from China – could flood the UK. Plans are underway to protect vital industries, including pharmaceuticals, automotive, and food and drink.
According to the Office for Budget Responsibility, UK GDP could fall by up to 1% next year under the worst-case scenario.
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