The UK's fragile economic recovery is under severe threat from a potential transatlantic trade war, as former US President Donald Trump threatens to impose sweeping tariffs on NATO allies, including Britain, over the territory of Greenland.
Trump's Tariff Ultimatum and UK Exposure
In a dramatic social media post, Mr Trump declared he would impose tariffs on all NATO countries that do not acquiesce to his demand for the United States to take over Greenland, which is an autonomous Danish territory. He specifically named the UK, France, Germany, and Denmark in his post.
The proposed levies would start at 10 per cent and could escalate to 25 per cent by June if the nations do not capitulate. This comes on top of an existing baseline 10 per cent tariff on almost all products under a previous deal negotiated by Prime Minister Keir Starmer, who had claimed the agreement positioned Britain well to weather Mr Trump's 'Liberation Day' tariff assault.
Economic Stagnation and Dire Warnings
The threat emerges at a critical juncture for the UK economy. While there was a brief sigh of relief last week following better-than-expected GDP figures for November, the economy has been effectively stagnating for months. This stagnation is attributed in part to what the source describes as 'brutal tax raids' by Chancellor Rachel Reeves.
Trade experts have issued stark warnings about the potential fallout. David Henig, director of the UK Trade Policy Project, stated that confidence in US commitments is now shattered, creating 'total uncertainty for importers and exporters.' He emphasised that the chaos in US trade policy is worse than the tariffs themselves.
Crawford Falconer, the UK government's former chief trade negotiator, told Times Radio that a combined 35 per cent tariff would 'take pretty well everybody out of the US market,' which would be very damaging despite the UK's export strength in services.
Potential Sectoral Impact and Recession Risk
The consequences would ripple across key British industries. Marco Forgione of the Institute of Export and International Trade warned that UK goods would suddenly become uncompetitive in the US, putting 'extreme pressure on the UK economy.' He concluded that if the tariffs remain for any period, it could potentially be enough to tip the UK into recession.
Former Chancellor Jeremy Hunt highlighted the particular vulnerability of the UK's critical pharmaceutical sector and car manufacturers. However, he also cautioned that the move would signal that 'America is an unstable market' and impose huge costs on the US itself.
The intervention has drawn a furious response from Western leaders, fuelling fresh fears that Mr Trump aims to destabilise the military alliance that has underpinned global security for eight decades, with severe economic repercussions for its members.
