The UK’s economy could take an almost 1% hit as a result of Donald Trump’s potential new tariff scheme, analysts have said. 

The CEBR thinktank says if the US imposes a 20% tariff on all imports from countries including the UK – and a 60% tariff on China – it could reduce the UK economy by 0.9% by the end of Trump’s second term.

Some media analysis say this would be worth £20bn.

It also warns that Trump’s looming return could reshape global dynamics, “particularly in trade, energy, and environmental policy”. 

To avoid this potential hit, CEBR suggests the UK enters into a free trade agreement with the US. 

“Unfortunately, the major sticking point to a deal remains food standards, and tariffs may be used to pressure the UK to accept US demands in this regard,” CEBR adds. 

‘Trump trade’ continuing as pound drops again

The UK’s benchmark stock market index, the FTSE 100, is recovering from the worst weekly run since June.

But, with just a 0.12% rise this morning, more will need to happen to make up for last week. Dragging down the FTSE 100 as the biggest faller is discount shop B&M. It’s a similar story for the FTSE 250 which also saw a drop last week, though it’s down again this morning. 

The pound is at a near two-week low against the euro but still buying €1.1952, a high sum compared with the last two years. 

A strong dollar, however, has forced the pound down to a low not seen since June – $1.2617. 

The so-called Trump trade continues, causing a Wall Street rally and a rise in value for the world’s reserve currency. 

The price of oil has fallen again and now sits at $71.02, down from a recent high of $88 in July.