As the US President Donald Trump threatens to impose a 10% tariff on UK exports, supply chain experts warn that this move could have far-reaching consequences for British consumers. Oisín Hanrahan, the co-founder and chief executive of Keychain, a company that works with major supermarkets to identify high costs in the supply chain, has cautioned that the tariffs “wouldn’t stay confined to trade statistics, it would start showing up in the weekly shop.”
The proposed tariffs come amid concerns that they could shave off 0.1% from the UK’s fragile economic growth, potentially tipping the country into a recession. John Wyn-Evans, the head of market analysis at asset management group Rathbones, has estimated that a 10% tariff could knock 0.1% off Britain’s GDP, while a 25% rate could hit output by 0.2-0.3%.
In response, Prime Minister Keir Starmer has sought to avoid a trade war, stating that it “isn’t in anybody’s interest.” However, experts warn that if the UK decides to retaliate, the “impact on consumers would be more immediate,” as tariffs on US imports would raise costs on products and inputs, quickly passing through to higher prices.
The looming dispute underscores the shift away from ever-increasing global integration and towards a world defined by sharper spheres of influence, a reality that businesses and investors must increasingly plan for and navigate. With the UK economy currently growing by 0.2-0.3% per quarter, the potential impact of these tariffs could be significant, potentially triggering a recession if the hit comes all at once.
As the government appears to be taking the threat from the US seriously, with Chancellor Rachel Reeves among the senior Cabinet ministers present at the Prime Minister’s announcement, the coming days will be crucial in determining the course of this trade dispute and its implications for the UK economy.
