Britain’s decision to leave the European Union has given it a critical edge in avoiding the tariff troubles that are set to hit other economies, particularly the EU, according to a new Reuters poll of economists.
The general consensus is clear: the UK is better positioned to weather U.S. President-elect Donald Trump’s proposed trade tariffs than its former European partners.
A Brexit Win
More than 80% of the economists polled expect Trump to impose tariffs of less than 10%—or none at all—on UK imports next year, an outcome that would have minimal impact on Britain’s economy. In stark contrast, economists in a similar poll last month predicted harsher consequences for the European Union, which has a much larger trade imbalance with the U.S.
James Rossiter of TD Securities told Reuters:
“Without the broader complexities of the EU trading bloc, the UK will be somewhat more flexible in reaching a negotiated settlement with President Trump. It also helps that trade in goods with the U.S. is roughly balanced, meaning the tariffs may end up being lower.”
A Balanced Trade Relationship
Part of the UK’s resilience stems from its trading relationship with the U.S., where trade in goods is relatively balanced. Unlike the EU’s heavy reliance on manufacturing exports, the UK has a more diversified trade profile, with only one-third of its exports comprising goods. This makes Britain less vulnerable to tariff hikes that predominantly target goods.
Stefan Koopman of Rabobank added:
“The UK is relatively well positioned to withstand the repercussions of President-elect Donald Trump’s proposed trade tariffs. Surely, as an open economy, the UK will inevitably feel the impact of a trade war, but likely to a lesser extent than countries that are heavily dependent on manufacturing and goods exports, such as Germany.”
US Tariffs: The Predictions
Of the 23 economists surveyed, 19 predict that the U.S. will impose tariffs of less than 10% or none at all on UK imports. Only four expect tariffs in the range of 10-20%, which would align with Trump’s proposed blanket tariffs on several nations.
BoE Monetary Policy Committee member Megan Greene cautioned against making definitive predictions but acknowledged the UK’s relatively favourable position:
“None of us know exactly what those tariffs might look like. We can’t even work out which direction tariffs would push inflation, in particular in the UK and also in the euro zone to some degree.”
Minimal Economic Impact
A significant majority of economists—20 out of 25—said the proposed tariffs would have an insignificant impact on Britain’s economy. This is welcome news for Prime Minister Keir Starmer’s government, which is under pressure to deliver economic growth amid ongoing global uncertainties.
British inflation rose to 2.3% in October from 1.7% in September, prompting the Bank of England to maintain its cautious approach to interest rate adjustments. Economists forecast that the BoE will cut interest rates gradually over the next two years, providing further support to the economy.
A Delicate Balancing Act
While the outlook with the U.S. appears positive, economists emphasise that Britain must navigate carefully between its trade relations with Washington and Brussels.
However, the flexibility afforded by Brexit seems to be paying dividends. Freed from the constraints of EU bureaucracy, Britain is in a stronger position to negotiate directly with the U.S. and mitigate the effects of Trump’s trade policies.
As the world braces for potential trade wars and economic headwinds, the UK’s unique position as an independent trading nation is proving to be a valuable asset—one that Brexiteers will no doubt celebrate as another victory for their vision of a global Britain.
