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UK economy could halve under Trump presidency
After securing the necessary Electoral College votes, Donald Trump will serve a second term as president four years apart from his first.
At 78 years of age, he is the oldest person to be elected and the first convicted criminal.
Addressing his supporters in West Palm Beach, Florida, Trump said: “I want to thank the American people for the extraordinary honour of being elected your 47th president and your 45th president. And every citizen I will fight for you, for your family and your future, every single day I will be fighting for you."
Concerns have been raised on the impact of Trump’s win as a result of his promise to introduce tariffs on all imports.
Trump believes this will boost American manufacturing, stating previously that it will encourage factories to be built in the US.
Meanwhile, experts have been painting bleak economic pictures of the future if a 60% levy on imports from China and a 10% blanket tariff for all other economies were to ensue.
This could also see subsequent retaliatory tariffs following from US trading partners.
According to the National Institute of Economic and Social Research (NIESR), US GDP growth would likely fall by 1.3-1.8 percent points over the next two years, depending on retaliation.
Cumulatively, US real GDP could be up to 4% lower than it would have been without tariffs. The inflation rate would also increase sharply in the US by around 3.5 to 5 percentage points.
NIESR has added that China’s GDP growth would also decrease by an approximate 1% over two years, while US tariffs could lower Chinese inflation in a scenario where China does not respond.
Mexico would be the hardest hit due to close trading ties with the US, followed by small open European economies.
The impact on the UK
Among these smaller open economies is the UK, which NIESR has warned would likely experience a significant slash in growth if the tariffs are imposed.
According to the report, activity will be weakened, inflation would rise, and higher interest would be imposed by the Bank of England in an attempt to counter a rise in prices.
It’s estimated that UK growth would fall by 0.7 percentage points and 0.5 percentage points in the first two years.
As outlined by Reuters, the inflationary rises – likely to be between 2-3 percentage points – would also dampen the plans of the UK Government, which recently announced its Autumn Budget. Such tariffs would probably see the UK needing to borrow more at the same time we see a hike in tax prices.
Public opinion
The UK public are also wary, with Ipsos polling data published yesterday showing that more than half (59%) anticipate Trump’s win could have a negative impact on UK-US relations.
Similarly, 40% believe the US will ‘mostly use its influence for bad’ under a Trump presidency.
Major concerns around economic and foreign policy were also identified. This included fears over increased international conflict (68%), the stability of the global economy (65%), and political stability in the US (63%) and other countries (61%).
Moreover, 56% are concerned about possible waning UK influence as part of the ‘special relationship’.
In contrast, concerns around a Harris win on similar issues were significantly weaker.
Ipsos interviewed a representative sample of 1,076 online British adults aged 18-75 between October 25th and 28th, 2024.
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