The British newspaper “The Times” published a report warning that the victory of Republican presidential candidate Donald Trump will expose companies selling in the American market to destruction. The report, written by Tim Wallace, deputy editor for economic affairs at the newspaper, explained that Trump will launch a campaign of customs tariffs on the imports of all countries that deal with the United States, including Britain, the European Union, China and others.
“The most beautiful word in the dictionary is tariffs, and it’s my favorite word. It’s more beautiful than love. It’s more beautiful than anything else,” Trump was quoted as saying this month.
The writer pointed out that Trump is planning to impose large new taxes on trade. Although he did not provide precise details, he indicated the possibility of imposing a tax of 10% or 20% on everything imported from abroad, and 60% on imports from China.
Wallace said that these measures would have very serious consequences for the global economy, including the British economy.
He explained that the United States is Britain’s largest single trading partner, representing 17.7% of all its international trade, and Britain’s total exports to the United States amounted to $192 billion in the 12 months until last March, while the value of imports amounted to $117.2 billion.
Two-thirds of British exports to the US come in the form of services, covering everything from technology, banking and consulting to holidays. This trade may be spared the worst impact, because Trump tends to focus his attention on manufactured goods.
However, the impact on companies selling into the US market could be devastating.
Destructive effect
The writer added that the comprehensive customs tariff would destroy many major British industries, such as medical and pharmaceutical exports to the United States, the total of which in the last 12 months amounted to 8.4 billion dollars, as well as cars, the value of whose exports reached 7.1 billion dollars.
The writer quoted – from Ahmed Kaya from the National Institute of Economic and Social Research – that the extent of the damage caused by Trump’s tariffs depends on the extent of the response of other countries. If other countries responded with tariffs of their own, international trade would slow and the entire world would become poorer.
Kaya expected that the size of the American economy, after 4 years of the trade war, would shrink by 3.5% from what it was before this war, and the Chinese economy by 2.1%, which would limit the growth of the global economy, including the British economy.
The writer continued to say that if Trump wins the elections and imposes comprehensive tariffs, growth in Britain will be only 0.4%, which means that two-thirds of Britain’s potential will be eliminated.
Meanwhile, the trade war will see inflation more than double, with inflation returning to around 4.5% – bringing back the cost of living crisis after families and businesses thought prices were starting to get back under control.
Kaya says the indirect effects of slowing global trade growth will include the impact on interest rates due to higher inflation.
Economies are at stake
Even if Trump opts for more selective tariffs, rather than blanket tariffs, Britain could still be at risk, because the Trump campaign’s dispute with the British government over Labor activists campaigning for Kamala Harris could prompt him to keep the UK in his sights when drawing up a list of places with… Unfair trade practices, or unusual threats.
Britain will find it difficult to respond, unlike the European Union, which has expanded its trade defense arsenal in recent years more than Britain.
One of the geopolitical transformations that a tariff war could cause is pushing Britain into the arms of China.
French economists predict that American exports to almost every other country will collapse over the course of this decade if Trump launches a tariff campaign.
At the same time, the world will import from China, giving America’s rival greater influence over the rest of the global economy.
Analysts at investment bank Morgan Stanley noted that the trade war may undermine key US alliances with Australia and the United Kingdom (OKOS), India, Japan and Australia (Quad), NATO, and the alliance between the United States, Japan and South Korea.
The British government may face a struggling economy and a shake-up of international relations, just as it launches an expensive set of tax rises at home.
