If President Donald Trump follows through on his tariff threat against the EU, it may inadvertently favor UK firms. Following the 2016 Brexit vote, many companies relocated operations to mainland Europe, causing UK businesses to lose investment and personnel. The 30% tariffs that Trump plans to impose on the EU may change that, prompting some businesses to return to the UK or grow their operations there. Alex Altmann, partner and head of the German desk at London-based accountancy and business advisory firm Lubbock Fine, even commented, “The UK could be a big indirect winner.” Altmann claimed the UK’s manufacturing industry may be revived Altmann argued that if EU tariffs hit 30%, the UK’s lower US tariffs could compel EU companies to move or grow their manufacturing in Britain. He added that Brexit left the UK with idle manufacturing capacity. Hence, a large tariff differential with the EU could be crucial to revive its standing as a major industrial hub. Trump’s tariffs are set to take effect on August 1, unless the EU and the US arrive at an agreement. The UK has signed a trade deal with the US that cuts car tariffs to 10% and gives it the lowest duty on steel. It also struck a “reset” agreement with the EU, negotiated by Prime Minister Keir Starmer, who opposed Brexit, to ease tensions after years of discord. The effect of Brexit on the UK is still one of the most debated topics, and the supporters and opposers are still divided about how beneficial or detrimental it was for the country. However, there is a consensus among economists that it hurts the country’s exports, labor market, and economic momentum. After Brexit, financial heavyweights like Goldman Sachs and JPMorgan started moving assets and staff to cities like Dublin, Paris, and Frankfurt to avoid the complexities of cross-border regulation. However, post-Brexit, the UK still depends on the EU. According to the European Commission, the EU provided more than 50% of Britain’s foreign trade in goods in 2024. Though the Office for Budget Responsibility forecasts that, over the long run, UK trade—both exports and imports—will decline by around 15% compared to a scenario in which the UK remained in the EU. Nickel believes the UK will not gain from US trade tariffs on the EU It’s unclear whether Trump will implement the 30% tariff on August 1. However, his erratic tendencies mean anything could happen; the EU could see the previously touted 50% to a lesser rate, close to their requested 10%. Some analysts maintain that the UK is unlikely to profit from trade disruptions affecting the EU, including Carsten Nickel, managing director at Teneo. He said the proposal to introduce a 30% tariff on the EU was still unclear and, even if executed, would not immediately cause business investment to come flooding back into the UK. He added that even if companies were to move their manufacturing, it would take years to develop. He also noted that the UK’s comparative advantage remained in financial services, rather than in countries such as Germany and Italy, where manufacturing is much more entrenched in supporting exports. Your crypto news deserves attention - KEY Difference Wire puts you on 250+ top sites
