How will Trump's tariffs affect British and European trade?
Donald Trump's return to the White House could trigger changes in global trade, with proposed tariffs alarming markets and raising urgent questions about the future of economic relations between the US, UK and EU. At the heart of these concerns is Trump's promise to impose universal tariffs of 10% to 20% on all imports and a 60% tariff on goods from China.
Yahoo Finance UK spoke to Brad Levy, CEO of Symphony, about the potential impact on businesses, governments and consumers.
For Britain, the stakes are particularly high. The US is Britain's largest trading partner, accounting for 15.4% of exports, worth more than £60 billion annually.
Sectors such as automotive, aerospace, chemicals, pharmaceuticals and mechanical engineering dominate these exports, but also face stiff competition from US-based companies.
Levy said adapting to the new trade dynamics would be complex for companies. “It's not that easy to change accounting standards and move your physical businesses around the world, open offices, set up systems,” he said, citing lessons learned from Brexit.
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These logistical and financial problems could prevent British companies from finding appropriate solutions, such as moving production to the US to avoid tariffs.
This could lead to British companies either absorbing the extra costs – reducing profit margins – or passing those costs on to consumers, potentially losing their competitiveness, Levy said.
The ripple effects could extend beyond profit losses. The National Institute of Economic and Social Research (NIESR) estimates that such US protectionist measures could reduce UK economic growth by 0.7 to 0.5 percentage points in the first two years, while driving up inflation and potentially could cause interest rates to rise.
The political dynamics between a Republican-led US government and the Labour-led British government could further complicate matters. Levy acknowledged the surface-level tensions, but noted the potential for collaboration behind the scenes.
“At first glance it will feel very bitter – a lot of conflict, a lot of noise,” he explained. “But underneath that, I think there will be more collaboration than people expect. In time, things will get done.”
Levy emphasized the economic role of key countries such as Germany and France in the European Union's response to Trump's tariffs.
“Germany is a very big market, a production center,” Levy said. “France is a very large market in financial services, but it also has quite a lot of technical talent. From an American perspective, in my opinion, you cannot treat France and Germany completely the same.”
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He added that the US must carefully address these differences in its relations with both countries.
Instead of imposing blanket tariffs, the Trump administration is expected to apply them selectively and target sectors such as steel, energy, textiles and agriculture based on strategic priorities. While China is likely to remain the focus, other regions – including Mexico, Canada, the UK and parts of the EU – are expected to face targeted measures.
“Tariffs will not be implemented around the world to close a gap,” Levy said. “It will be done in a way that benefits the US and its allies.”
He said tariffs could be used to protect U.S. industries and gain concessions in trade negotiations.
Beyond trade wars, the broader economic shift reflects what Levy called “regional rationalism.” He argued that globalization has pushed supply chains to unsustainable extremes, increasing inefficiencies and risks.
“We've gone too far in sourcing everything from the other side of the world,” Levy said. “Now there is a movement to localize production. Look at the US investing in chip production or France with its AI champion Mistral, these things need to be regionalized.” He added that this move is not just protectionism, “it's about building resilience and energy efficiency.”
Another notable feature of Trump's economic agenda is the appointment of Elon Musk to head the newly created Department of Government Efficiency (DOGE). While dramatic federal cuts seem unlikely, Musk's role signals a focus on reducing layoffs and streamlining operations.
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“The U.S. federal government could benefit from being more cost conscious,” Levy said. “If Musk's influence brings smarter, leaner government programs, it could complement the administration's pro-business agenda.”
As Trump's policies take shape, companies and governments must prepare for the possibility of unrest. Higher rates and changing corporate tax structures could force companies to make difficult decisions about their supply chains, manufacturing centers and pricing strategies.
“The key is adapting to the new dynamics,” Levy said. “While the disruptions will be significant, they also provide opportunities for smarter trade policies and more resilient economies.”
For Britain, the EU and the US, the challenge lies in dealing with these complexities with a mix of pragmatism and innovation. Whether this marks the beginning of a more balanced trade landscape – or further ruptures in global economic ties – will depend on how leaders and industries respond to the changing tides.
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