UK warns of potential 'tariff war' as US trade policies could impact inflation, jobs

UK’s Business and Trade Secretary Jonathan Reynolds highlighted on Thursday that the country’s reliance on international trade and investment makes it especially vulnerable to the impacts of US tariffs.

Reynolds’ comments come amid increasing uncertainty over the trade policies of US President-elect Donald Trump, who is set to be inaugurated on Monday.

During his election campaign, Trump pledged to introduce a blanket 20% tariff on all foreign goods to protect US industries.

However, experts have warned that such a move could lead to higher prices for American consumers and contribute to rising inflation in the US.

While there is concern that the US may impose broader tariffs, British ministers are hopeful that Trump will instead target specific sectors or countries, potentially sparing the UK from widespread economic fallout.

Earlier, Trump denied reports suggesting that his team was considering tariffs solely on critical imports.

Speaking to Sky News, Reynolds expressed apprehension about the broader global consequences of Trump’s trade policies. “I am worried because the UK is a very globally oriented economy. The exposure, the danger to the UK, is actually greater than in some comparable countries,” Reynolds said.

However, Reynolds also suggested that the UK is in a somewhat better position than other countries, due to its different trade relationship with the US.

He acknowledged that the UK’s status as a major trading partner for the US could serve as a mitigating factor in any future trade disputes.

“We’ve got a good argument to make, and I think there is a chance, actually, if we play this right, to get an even better relationship out of some of these things that have been put forward,” Reynolds said.

Nevertheless, Reynolds cautioned that the UK must remain vigilant. “We can’t be complacent—and there are risks, yes, of a tariff war,” he said, emphasizing the potential negative impacts on the UK economy, including rising prices and job losses.